Tuesday, January 26, 2021

The GameStop Market

 

By Alex Eule |  Tuesday, January 26

'Gamestonk.' There's GameStop, and then there's everything else. For anyone who has been following the saga of GameStop over the last two weeks, it might have seemed as if the story of the beleaguered videogame retailer had already hit fever pitch. It hadn't. The stock soared another 93% today, and it's up another 42% in after-hours trading tonight. That represents a 10-fold gain since Dec. 31. Today's rally, like the other gains, came on no real news from the company. GameStop hasn't responded to repeated requests for comment from my colleagues. That's not to say there wasn't lots of news about the company. 

Reddit's WallStBets forum remains a source of significant material about trading the stock, which has become a battle against the establishment. "This is personal. For all of us," one Redditor wrote today:

I've never seen anything like what's happening with $GME before, and I don't think I'll ever see anything like this.

This is a big moment. A tug of war between tradition and the future.

Hedge fund managers live in the past, and continue to look down upon the retail investors. They truly believe that we, the average retail investors, don't know anything about finances or the market (which may be true), and we're just gambling our money away.

We don't know any better. WE NEED HEDGE FUND MANAGERS TO TELL US WHAT TO DO! SAVE US!

This is the world they want to live in. This was the past.

The past isn't giving up. Hedge fund manager Michael Burry, who is famous for calling the housing crisis and for his role in The Big Short, tweeted today that trading in GameStop was "unnatural, insane, and dangerous." He quickly deleted the tweet but confirmed the contents to Connor Smith: "Burry told Barron’s in an email that he deleted the post because he tagged the wrong SEC Enforcement account in his tweet." 

Regulators charged with keeping markets functioning in a smooth and fair manner are also starting to take a closer look at the GameStop phenomenon. Tonight, a top regulator in Massachusetts told my colleague Avi Salzman that he's closely watching GameStop trading. “I’m concerned, because it suggests that there is something systemically wrong with the options trading on this stock," William Galvin, the Secretary of the Commonwealth of Massachusetts, said.

Ultimately it doesn't matter whether you're short, long, or agnostic on GameStop -- the stock has become a fixation. Even Elon Musk is getting in on the act. This afternoon, the Tesla founder and CEO tweeted a link to WallStBets along with one word: Gamestonk!! 

 

 


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