Upset on Wall Street The GameStop case or how a 'trolling' on Reddit triggers the shares of a company adrift
It started out as a lesson to bigwigs who didn't give a penny for
GameStop
and has turned out to be the biggest
Wall Street
shake
in years.
Not even a global pandemic like the
coronavirus
has shaken the foundations of the New York parquet as much as this movement organized from a subgroup of the well-known social network
Reddit.
Several of the largest investment funds in the world are still trying to fit in the
billions of dollars that have been left behind in just four days,
which have gone since GameStop shares surpassed
18 euros in
the past. Friday until the
347
in which they finished this Wednesday.
This popular chain of video game and electronics stores
was on the brink
of the pandemic.
Its actions in March, coinciding with the start of the confinements, reached a
minimum of 3.5 dollars,
which led to the entry into its shareholding of
Ryan Cohen,
founder of the online pet food store
Chewy.com .
With it came a turn in the business strategy that allowed the titles to recover to the 17 euros that they marked at the end of 2020.
Only Cohen and a few others were confident of the company's recovery.
On the contrary, a group of
more risky
traders, hedge funds
and investors bet on the fall in value.
They did so through
short buying and selling,
a speculative practice that consists of borrowing shares from a company, selling them en masse to cause their price to fall, and then buying them back for a cheaper price.
Profit is the
difference between the first price and the second.
In a simplified way, bears (as this type of investor is known)
earn more the more the stock falls
and lose more the more it rises.
And that is what has happened on Wall Street.
A group of more than
two million
users
, organized in the
WallStreetBets
sub-forum
,
decided last week to launch a virtual offensive against the GameStop bears.
The offensive is based on
buying shares in an outrageous way
to raise their price and, with it, cause the millionaire losses that we are seeing these days in the funds.
One of them,
Melvin Capital Management,
led by
Gabriel Plotkin,
has been forced to close its bearish positions against the video game and electronic products chain due to the magnitude of its bleeding.
But beyond the specific case of GameStop, what happened on Wall Street is causing a greater shock.
On the one hand, the uncertainty has spread among investors who fear that the strategy will be repeated in other companies in difficulties such as
Blackberry
or
AMC.
On the other hand, because many of the funds and investors that have always opposed the regulation of the market are now asking for the intervention of the authorities.
For now, the
CEO of Nasdaq, Adena Friedman,
has told
CNBC
that they will monitor upcoming movements and stock operations driven from social networks.
The Nasdaq, which includes the main technology companies, has closed with
falls of 2.6%,
compared to 2% that the
Dow Jones
has left
.
According to the criteria of The Trust Project
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