[118][114] Asset manager BlackRock had a roughly 13-percent stake in GameStop, which was worth $2.6 billion at the peak. In January 2021, a short squeezeof the stockof the American video game retailer GameStop(NYSE: GME) and other securitiestook place, causing major financial consequences for certain hedge fundsand large losses for short sellers. On February 24, the GameStop stock price doubled within a 90-minute period, and then averaged in the neighborhood of $200 per share for another month. [104][105], On January 26, it was reported that short sellers had lost a total of $6 billion due to the squeeze. This initially triggered a monstrous short squeeze. GameStop isn't the only stock being targeted by investors. [174][175], Texas Attorney General Ken Paxton said he would also investigate the decision of brokerages to limit the buying of securities related to GameStop and other stocks, saying that it "stinks of corruption". He shared information regarding his investment on r/wallstreetbets, providing regular updates on the investment's performance, including times when the investment had plunged. [106] According to Morgan Stanley, a number of hedge funds covered their short positions and sold shares in their portfolio to reduce leverage and market exposure, in some of the largest such actions within 10 years. [57][249][250] Bloomberg News had previously reported that 40 percent of Robinhood's revenue was derived from selling customer orders to market-making firms including Citadel Securities and Two Sigma Securities, in a practice known as payment for order flow. Approximately 140 percent of GameStop's public float had been sold short, and the rush to buy shares to cover those positions as the price rose caused it to rise even further. [63] On January 29, it was reported that Robinhood had raised an additional $1 billion to protect the company from the financial pressure placed by the increased interest in particular stocks and meet the collateral requirements of clearing houses. This is unacceptable. Jan. 22, 2021: GameStop surges 50% As the tug-of-war between the everyday investors and hedge funds heated up and support grew for GameStop on r/wallstreetbets, the stock skyrocketed more than 50% in the trading session on Jan. 22. The proportion of shares borrowed to back those short positions had been between 50 and 100 per cent of the company's. . Autoweek. The typical short squeeze lasts one or perhaps two days, with the major price spikes often happening overnight.. [23] "[191] As of February 2, 2021, Robinhood was facing 34 separate class-action lawsuits. [88][248] Steve Cohen deleted his Twitter account after threats to his family. GameStop is a brick-and-mortar video and computer game retailer. This can result in a cascade of stock purchases and an even bigger jump of the share price. [241] However, after another round of negative reviews on the app dropping it to a 1.1-star rating, Google confirmed that the new reviews do not violate Google policies and will not be removed. "[258][259], During the Congressional hearing, lawmakers asked Ken Griffin if anyone in Citadel pressured Robinhood to restrict trading, to which he answered, "absolutely not. It's difficult to have a partnership when these kind of things go down this way. [64][65], As of January 29, Robinhood was still imposing limits on the trading of GameStop, AMC, and Blackberry stocks. [17][18][19] Gill, a 34-year-old marketing professional and Chartered Financial Analyst (CFA) from Massachusetts, stated that he began investing in GameStop during the summer of 2019, after believing the stock to be undervalued. This is what a rigged system looks like, folks! GameStop traces its roots to Babbage's, a Dallas, Texas-based software retailer founded in 1984 by former Harvard Business School classmates James McCurry and Gary M. Kusin. "[b]a reference to the "stonks" meme rising in popularity at the timealong with a link to the r/wallstreetbets subreddit. In 31st ACM Web Conference, Industry Track (WWW), Lyon, France (2022). [31][32] However, it is unclear the extent to which the suspected bot accounts influenced trading. GameStop short squeeze round 2 while the banks and hedge funds go bankrupt sounds about right. "; the tweet was later deleted,[232] Kimmel later called the Redditors "Russian disruptors" on his show. Let's make this situation easier to understand with an . He stated on January 29, 2021, after the GameStop short squeeze, that he "thought this trade would be successful" but "never expected what [had] happened over the last week", adding that he planned to continue his YouTube channel as Roaring Kitty and potentially buy a house. [240] Google deleted at least 100,000 such reviews, calling them "coordinated or inorganic". As the stock prices continued to decline, many retail investors suffered significant losses,[73][74][75] with some r/wallstreetbets users losing a majority of their savings.[123][124]. Canada - Franais. [177][178] On February 18, 2021, the committee, chaired by Representative Maxine Waters, held a remote hearing titled Game Stopped? The movie will feature the David vs. Goliath battle between retail traders and hedge funds and use actors instead of a . [184][185] The lawsuit, which was filed in the United States District Court for the Southern District of New York, claimed that Robinhood "purposefully, willfully, and knowingly removing the stock 'GME' from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market"; the lawsuit also accused Robinhood of "manipulating the open-market". "[218] In another CNBC interview joined by Canadian businessman and Shark Tank investor Kevin O'Leary, O'Leary disputed Galvin's assertions, saying that real-world education was positive; that the risk of being targeted by "social media vigilantes" would dissuade hedge funds from aggressively selling short stocks; and zero-commission brokerage apps such as Robinhood had sparked a growing interest in retail investing. [184][185] Several other investors began using the app DoNotPay to automatically join the lawsuit. [35] A brief, sharp rise in the share price to over $200 followed Musk's tweet. The stocks are all prime candidates for a short squeeze that could stick these . [12], The subreddit r/wallstreetbets is an online community on Reddit, a social news website. [41] The value of AMC Networks (ticker symbol: AMCX) also increased significantly, which was believed to have happened because of the stock's name being similar to AMC's. [71] The short squeezed securities' prices continued to decline during the week. In one of the most notorious and publicized short squeezes of all time, the stock of video game retailer Gamestop exploded from around $17 per share in early January 2021 to an intraday high of. [155], Following the stock market surge, futures for silver began to rapidly increase as well,[156][157] although later news reports clarified that it was unclear who was behind the rise. Restricting who can buy and sell is using a hammer on free markets", "It took less than a day for big tech, big government and the corporate media to spring into action and begin colluding to protect their hedge fund buddies on Wall Street. GameStop shares popped nearly 9% in extended trading on Tuesday before paring most of those gains, following a Q1 report that was worse than expected with a LPS of $2.08 on revenues that were up 8% at $1.38bn, though the company said it's still not comfortable giving guidance yet. [168] Senator Sherrod Brown announced that the Senate Banking Committee would hold a hearing on the state of the stock market and the alleged market manipulation surrounding the GameStop short squeeze. GameStop may also be known as or be related to Babbage's (1984-1999), GameStop, GameStop Corp, GameStop Corp . A Reddit-fueled day-trading craze last month pushed shares of GameStop Corp., the videogame retailer, as high as $483, but the hype has fizzed.. [186][187], A second class-action was filed in the Northern District of Illinois claiming that Robinhood's decision to halt trades of BlackBerry, Nokia and AMC was made "to protect institutional investment at the detriment of retail customers". [96] The surge also had an effect on the prices of gold and copper on the London Metal Exchange. [248], Following the decision by brokerage firm Robinhood to halt the buying of stocks affected by the short squeeze, users on Reddit and other social media called in question its relationship with Citadel Securities. [251] The Washington Post reported that Robinhood routed more than half of its customer orders to Citadel, which was its largest market making partner by volume. [254], During the February 18 hearing held by the House Financial Services Committee, Citadel CEO Kenneth Griffin and Robinhood CEO Vlad Tenev faced questioning regarding their relationship and denied that the limits imposed on the trading of GameStop shares had been requested by Citadel. I've dealt in deep value stocks for years but have never endured bearish sentiment this heavy. Toilet Paper Analogy. [54] Anthony Denier, the CEO of Webull, stated that increased collateral requirements for their clearing house meant Webull themselves were restricted from opening new positions. Other investors held onto their long positions while the stock prices were declining rapidly, amid widespread calls on r/wallstreetbets to hang on to the failing shares. I think small-time investors like that, unsophisticated investors, are going to be hurt by this. [57][58][59] The DTCC, for instance, increased the total industrywide collateral requirements from $26 billion to $33.5 billion,[63] noting that the large trading volumes in specific stocks "generated substantial risk exposures at firms that clear these trades []particularly if the clearing member or its clients are predominantly on one side of the market". [40], On January 27, r/wallstreetbets triggered a short squeeze on AMC Theatres (ticker symbol: AMC), a company in a similar position to GameStop. [15], Another user, Stonksflyingup, posted a humorous video on October 27, 2020, explaining how a short position by Melvin Capital could be used to execute a short squeeze, using a scene from Chernobyl to illustrate how the hedge fund would blow up similarly to a nuclear reactor. ", "Nokia's stock soars toward a record gain on record volume, for no apparent reason", "Brokerage Firm Siebert Soars as Reddit Feed Targets Another Short Squeeze", "Reddit's GameStop gang pushes Tootsie Roll to record", "Caught in the GameStop frenzy, a different GME stock goes on a wild ride", "GameStop Mania Spreads Half a World Away to Target Glove Makers", "GameStop mania spreads as far as Malaysian glove makers", "Shares of Rocket Companies, a large short target of hedge funds, jump more than 70%", "Rocket Companies stock soars 70% on speculative trading, mirroring GameStop rally", "Rocket Stock Is the New Meme Trade. Market mechanisms include the reality that some people will attempt to game the market mechanisms and some will pay the price. [32], Gamestonk!! [49] Other brokerages soon followed suit. [12][28] According to Dow Jones market data, more than 175 million shares of GameStop were traded on January 25, the second largest total in a single day, surpassing its 30-day average volume of 29.8 million shares. The data was described by Bloomberg News as "potentially an early sign that the short squeeze that propelled GameStop has progressed. [36] As of January28, 2021[update], the all-time highest intraday stock price for GameStop was $483.00 (nearly 190 times the low of $2.57 reached 9 months earlier in April 2020). [37] In pre-market trading hours the same day, it briefly hit over $500, up from $17.25 at the start of the month. [219], On January 28, New York State Comptroller Thomas DiNapoli told reporters that the state pension fund, which had 647,500 shares in March 2020, had sold off hundreds of thousands of shares since then, benefiting from the squeeze. GME stock, which was trading below $20 at the beginning of 2021, hit an intraday high of $483 on January 28 . [235] More generally, it was recognized that Wall Street was now subject to the same populist vigor (afforded by Internet connectivity) as the entertainment industry, politics, and so on. MeaningCloud is a Software as a Service product that enables users to embed text analytics and semantic processing in any application or system. CNN reported that the drop was partly due to restrictions imposed by Robinhood and other brokers on the number of shares that could be purchased at once by their clients. [21] r/wallstreetbets was the fastest-growing subreddit at the time the community surged by more than 1.5 million users overnight (to a total of 6 million members) on January 29. [226] Palihapitiya, who passed on early investment opportunities in Robinhood, opined that the founding co-CEOs, Baiju Bhatt and Vladimir Tenev, lacked integrity and urged his followers to delete the app. A variety of politicians and commentators across the political spectrum made statements in support of those driving up the price of GameStop and other stocks, as well as against Robinhood and other companies' decision to limit these trades, including Representative Alexandria Ocasio-Cortez,[205] Senator Ted Cruz,[206] Representatives Ro Khanna,[207] Ted Lieu,[208] and Rashida Tlaib,[209] Fox Business host Charles Payne,[210] and conservative political commentators Rush Limbaugh,[211] Ben Shapiro,[212] and Donald Trump Jr.[213][214], Senator Elizabeth Warren criticized both the short sellers and the buyers, and argued that more regulation was needed. [158] On January 28 and 29, the price of silver rose 10 percent. Here's how they end", "Reddit's WallStreetBets Founder Sells Life Story to Movie Producer RatPac Entertainment", "GameStop and WallStreetBets Documentary in the Works From XTR and The Optimist", "Gaming Wall Street Trailer Examines Gamestop's 2021 Stock Phenomenon", "Review: Talking-head documentary 'Gamestop: Rise of the Players' focuses on the little guys", https://en.wikipedia.org/w/index.php?title=GameStop_short_squeeze&oldid=1150240747. [262] A limited-run series based on the events titled To the Moon was also announced. Purchasing the stock to cover their short positions raises the price of the shorted stock, thus triggering more short sellers to cover their positions by buying the stock. Then if we look at the third most recent 13F Form, which came out on March 31st, 2020 we can see they claim to be shorting 2,800,000 shares of Gamestop at $9,800,000 of Value, which means they shorted GME for $3.50 a share. On January 28, some brokerages, particularly app-based brokerage services such as Robinhood, halted the buying of GameStop and other securities, citing the next day their inability to post sufficient collateral at clearing houses to execute their clients' orders. ", "Silver price hits eight-year high, as GameStop shares fall back", "Reddit users say they are not behind Monday's silver squeeze", "Redditors divided on shift to push up Silver", "Silver price surges amid investor frenzy but Reddit users say it isn't them", "Silver is surging but users on WallStreetBets say they're not behind the rally", "Biden administration 'monitoring the situation' with GameStop's stock, White House says", "Exclusive: Treasury's Yellen calls top regulator meeting on GameStop volatility, consults ethics lawyer", "Yellen to Meet Financial Regulators Thursday on Market Tumult", "Regulators Meeting on GameStop Frenzy Are Unlikely to Find Systemic Risk", "Pelosi says Congress will be part of GameStop scrutiny", "Breaking: Incoming Chairman @SenSherrodBrown's response to the current state of the stock market", "Private investors deserve to know Wall Street and hedge funds are not engaged in malicious behavior when the pendulum swings in favor of private investors, not corporate cronies. [45], On January 28, more than 1 million GameStop shares, then worth $359 million, were deemed failed-to-deliver. [30], Later analysis by a cyber security company of social media posts suggested that thousands of automated bots may have hyped GameStop stock, Dogecoin, and other stocks, on social media. @FSCDems need to have a hearing on Robinhood's market manipulation. Weaponising Social Media for Information Divide and Warfare. [165][166] The regulators were not seen as likely to view the volatility as creating any systemic risks. (2023). A Comparative Analysis of New Users on WallstreetBets During the Gamestop Short-squeeze. Those include American Airlines and AMC-the latter of which has even been mentioned by Redditors. GameStop Canada. 4,273 Jobs. Hello! In a short squeeze, if users are able to drive the price of a stock high enough, they can force hedge funds to liquidate their short position, driving the price even higher. and Kerckhoven, S.V. Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide. [227] SpaceX and Tesla CEO Elon Musk also criticized the general practice of stock shorting, calling it a "scam legal only for vestigial reasons"[228] A number of major hedge funds had previously shorted Tesla, incurring losses of more than $40 billion as the stock rose considerably. GameStop had been a favourite target of short-sellers for some time. Because Yellen had received speaking fees from Citadel before becoming treasury secretary, she sought and received permission from Treasury Department ethics lawyers before convening the meeting. [263] Jaime Rogozinski, who founded r/wallstreetbets in 2012, sold off his life experience to RatPac Entertainment,[264] and a documentary based on the event, created by the studios XTR and The Optimist and partially funded by a Kickstarter campaign, is also in the works. [267], Gains by existing shareholders and third parties, Alleged conflict of interest between Robinhood and Citadel. [179][180] Representatives focused their attention on Robinhood's role in the event, asking Tenev why the brokerage had limited the trading of some securities and if it had clearly communicated its business model to its customers. [114][115] An analysis by Reuters concluded that some of Wall Street's largest asset managers were able to realize gains both from their share stakes, as well as from lending out stocks to short sellers. [114] The mutual fund Morgan Stanley Institutional Inception saw a 30-percent rise in its value based in part due to the 346,943 GameStop shares it had purchased in September 2020. U.S. House Committee on Financial Services, Economic impact of the COVID-19 pandemic in the United States, settle a member's outstanding transactions, The Church of Jesus Christ of Latter-day Saints, Keith Patrick Gill's Opening Statement Before the U.S. House Committee on Financial Services, United States District Court for the Southern District of New York, United States House Committee on Financial Services, Massachusetts Secretary of the Commonwealth, "How you could lose everything by short-selling stocks, whether it's betting against GameStop or Tesla", "GameStop: how Reddit amateurs took aim at Wall Street's short-sellers", "Meme Stock Saga Officially Over? [102] Due to the enormous losses, Left stated that Citron Research would stop providing short-sell analysis, and instead focus on "long side multibagger opportunities for individual investors". Any number over 10% is relatively high, but it's nothing crazy for a company like GameStop that is struggling so badly. 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