GameStop stock prices rose on Tuesday, falling nearly 60 percent, to $ 91 a share in the afternoon trade. The fall also indicated that WallStreetBets Reddit’s popular stock market discussion forum, one of the main forces behind last week’s spectacular rally on the video game retailer’s and others ’troubled actions, could be losing its magic to move the market.
The fall of GameStop followed a sharp reduction in short interest on the stock, which measures how many of the company’s shares have been lent to sell. Many had pointed to this short interest rate, which was previously high, and the fact that hedge funds and others betting against the video game retailer had shrunk as GameStop shares had risen.
The fall could also cause significant losses for some individual investors who had followed the stock market’s positive suggestions. WallStreetBets, which has risen in popularity last week to eight million members. GameStop shares hit an all-time high of $ 483 on Thursday.
These shares have now fallen 81% to $ 91 in less than a week. This has wiped out nearly $ 29 billion in market value for GameStop, which in its last week had a market capitalization of $ 35 billion. On Tuesday that market value had dropped to $ 6.4 billion.
Stock prices of other companies that have received reinforcement mentions on WallStreetBets have also fallen sharply. Shares of AMC Entertainment also fell about 50 percent on Tuesday, to about $ 6.50 each. These shares had been up $ 20 last week. Shares of BlackBerry, which had reached $ 28 last week, also fell to $ 11 on Tuesday.
On Monday, the acting chairman of the U.S. Securities and Exchange Commission, Allison Herren Lee, told NPR that the stock market regulator was studying different aspects of the sudden rise in GameStop shares, including whether brokers they acted properly and if there had been market manipulation. He also warned that companies were trying to raise money by selling shares at prices that appeared to be inflated by social media-driven traders and were unsustainable.
CBS MoneyWatch reported on Monday the moderators of the WallStreetBets discussion forum had recently detected a “large amount” of bot activity in the stock recommendation content being posted to their group.
And on Monday, Naked Brand Group, which sells intimate apparel for both men and women, announced that it had sold more than 29 million shares in a continuing bid at $ 1.70 each, raising $ 50 million. for the company. The company, based in Auckland, New Zealand, is in the process of closing all its stores in favor of online sales.
Shares of Naked Brand had been trading at just 7 cents each in November. In its bid document, filed with the SEC, the company said its share price had experienced “extreme volatility” in recent weeks. Price changes were said to appear to be driven by social media talks, as well as the company’s “short-term interest,” as well as other factors.
On Tuesday, shares of Naked Brand fell to 94 cents each, a 45% drop from Monday’s bid price. A Naked Brand spokesman did not return a CBS MoneyWatch request for comment.