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Menlo Park / New York / Frankfurt (dpa) - The share price of the computer game retailer Gamestop was still just below the 18 dollar mark at the beginning of January.
But what happened next, even experienced finance professionals have not yet experienced: In the past two weeks, the Gamestop rate rose by a total of around 2000 percent.
Driven by hobby investors on the Reddit online platform, who organized themselves in the “WallStreetBets” forum, the price was driven to seemingly infinite heights.
With concerted purchases, retail investors forced hedge funds to resolve their bets on a decline in the share price.
Which then drove stocks up and cost the fund billions.
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Scott Galloway, professor at the economics faculty at New York University, chooses a drastic comparison: The new online trading platforms such as the online broker Robinhood, which is mostly used by Reddit users, are the latest crack dealers who are interested in the Customers constantly trigger the release of the happiness hormone dopamine.
They do everything in their power to constantly push new deals with game elements: “Confetti is being used to celebrate transactions.
The broker app looks like a colorful Candy Crush interface. "
Even with the speculation with the Gamestop share, everything initially looked like a great party: But when up to $ 500 for a Gamestop share was offered for a short time on Thursday, Robinhood pulled the rip cord and blocked further purchases in the app.
The price collapsed at times to $ 126 and finally closed at $ 194.
Trading in the papers was already significantly disrupted the previous days, because not only Robinhood, but also several other online brokers from E-Trade and TD Ameritrade to the platforms of the big asset managers Charles Schwab and Fidelity no longer had the big crowd could handle.
The German online broker Trade Republic also put up a stop sign on Thursday evening.
The shares Gamestop, the cinema chain AMC, BlackBerry and Nokia as well as the companies Express Inc. and Bed Bath & Beyond Inc. are "apparently currently the subject of violent, coordinated price speculation," wrote the Berlin neo-broker to his customers.
"Because of the associated risks for you, we are not accepting any new orders to buy these shares until further notice."
In the meantime, Trade Republic lifted the purchase ban.
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Robinhood had announced the previous evening after a storm of indignation from investors that the trading restrictions on the overheated shares of Gamestop and Co. would be relaxed again.
On Friday, the price of the computer game retailer picked up again - at times in pre-market US trading by around 100 percent.
But it remained far from the highest level.
Gamestop itself is actually deep in the crisis and was meanwhile already written off.
The branch business with video games does not have great prospects anyway and is suffering from the pandemic.
The fact that the hobby traders selected the company as a “meme stock” was - until the hype could no longer be stopped - felt by many as a joke.
In the United States, Robinhood's decision to only allow the sale of Gamestop shares triggered a storm of indignation.
On Thursday even top US politicians got involved in the conflict.
The future chairman of the US Senate banking committee, Sherrod Brown, announced a hearing “on the current state of the stock market”.
It is time for the SEC and Congress to make the economy work for everyone, not just Wall Street.
"The people on Wall Street only care about the rules when they're the one who hurts," Brown's statement said.
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The frustration was even greater among investors who found themselves slowed down by Robinhood's restrictions on their profit path.
"They take the money from the poor and give it to the rich," outraged Charlie Hancox from the activist platform Inveez.
Like other users, he accused Robinhood boss Vlad Tenev of stabbing them in the back in the power struggle with the hedge funds.
In contrast to the flash mob of Reddit users, the professional investors had speculated on falling prices.
These “short sellers” sell the relevant share first, even though they do not yet own it.
At a later point in time, when the “perfect” falling price arises, the paper is then bought in order to be able to service the deal.
Such short sellers therefore bet on stocking up on cheaper papers by the date of return and then cashing in the difference as a profit.
The Reddit community, however, relied on rising prices.
This led to a veritable battle of strength with the hedge funds, which then got into great economic difficulties due to the organized mass purchase of shares and the associated rising prices, and in some cases had to write off losses of billions.
Citron Research, one of the hedge funds that gave up its bet against Gamestop and almost completely forfeited its stake, announced a major strategic turnaround on Friday.
After 20 years, Citron Research wants to discontinue its "Short Reports" analyzes, which are intended to reveal weaknesses in companies against which the fund mostly speculates.
Citron boss Andrew Left said that his company no longer wanted to be part of the establishment. After all, it began as an outsider on Wall Street.
Tenev denied in an interview with Bloomberg TV that his company was being pressured by the Wall Street players.
Robinhood itself did not have enough free capital to secure the purchases of the hotly traded shares with the necessary deposits.
According to a report in the New York Times, Robinhood had to raise over a billion dollars from its investors in the short term in order to remain liquid.
The purchase stop was a technical and operational decision, ”said Tenev.
Those affected do not want to be satisfied with this answer.
Two frustrated Robinhood clients filed lawsuits against the neo broker in New York and Chicago.
After the ups and downs of the Gamestop share contributed to a shock in the financial markets, the regulators will have to look at Robinhood's business model anyway, also because the company from Menlo Park, California is striving to go public.
Using the app, trading stocks, but also significantly riskier papers, has become as easy as ordering a pizza online.
And there aren't even any fees.
Consumer advocates accuse the company of making complicated financial products available to inexperienced customers, who then not only run the risk of losing their savings, but also of getting into heavy debt.
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Exchange expert Dirk Müller warned on Friday at ntv.de: "What happens at Gamestop reveals that the exchange is no longer a playing field, but a battlefield."
© dpa-infocom, dpa: 210129-99-225135 / 2
Critique of OTP by Scott Galloway
Robinhood CEO on Bloomberg TV
Dirk Müller at n-tv