Salvador Vergara was so excited about GameStop Corp. in late January he took out a $ 20,000 personal loan and used it to buy shares. At that time, frantic stocks fell by about 80%.
GameStop’s volatile trip hits the wallets of individual investors like Mr. Vergara, who bought the shares in a frenzy fueled by social media. These occasional traders say GameStop was their “YOLO” or “only live once” trade. They bought around its peak in late January, betting that it would continue its astronomical rise. While some were charged before crashing, others who hung on to their shares are in the red.
Vergara, a 25-year-old security guard in Virginia, began investing four years ago after deciding he wanted to retire young. To save money, he drives a 1998 Honda Civic, eats a lot of rice and lives with his father. He spent his savings mainly on diversified index funds, which are now valued at about $ 50,000. At the time, Mr. Vergara, a reader of the WallStreetBets page on Reddit, had long seen posts about buying GameStop shares and the colossal increase in shares.
He did not want to touch his investments in index funds, so he obtained a personal loan with an interest rate of 11.19% from a credit union and used it to finance most of his purchase. by GameStop. He bought shares at $ 234 each.
GameStop shares started the year around $ 19, expanded to nearly $ 350 (and nearly reached $ 500 in intraday trading) in late January, and then began to return to the ground. Shares closed at $ 52.40 on Friday, 85% less than the maximum close.