Redditors Pump GameStop, Trading Halted for Bitcoin-like Volatility
GameStop stock closed at a new record today of $65.01 after closing at $43.03 yesterday. Ten days ago, it wasn’t even worth $20—and five months ago, you could get a share for a fiver.
That’s some Bitcoin-like growth for the video game retailer. Moreover, the 51% rise in the last day comes in the same form as a cryptocurrency pump scheme: vocal Redditors, urging others to buy, buy, buy—and blasting anyone with the temerity to sell in the midst of a rally.
After losing 96%, GameStop's stock price surges to record highs. Just 18-months ago, GameStop was in financial woes, closing hundreds of stores. GME crashed to $2.60 just 10-months ago. Today, it closed at an all time high of $65.01.
Never forget this is possible. pic.twitter.com/JIivnfFG6C
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The crew helped push the price up so rapidly that trading of the asset on the New York Stock Exchange was halted four times on Friday to let things cool down.
The r/wallstreetbets subreddit, which describes itself as “like 4chan found a Bloomberg terminal,” boasts two million users. And all of the posts in the top 10 as of Friday evening were devoted to stock in GameStop, which goes by the ticker GME.
One popular post features a meme of Mel Gibson as William Wallace in the movie “Braveheart” telling his motley army to hold. At the top, it says, “Fucking ban anyone who sells GME.” Oh, there are three rockets as well because it’s apparently going to the moon.
But there is a villain in this story—and it’s not the English, but a short-sell investment newsletter called Citron Research, which predicted GameStop would return to $20, likely because, well—check out the much sadder r/GameStop subreddit for the recollections of former employees.
“This is a failing mall-based retailer,” said Citron Founder Andrew Left yesterday, before GME rose another 50+%. “So the amount of people who are so passionate about putting GameStop higher, not on the basis of any fundamentals, it just shows the natural state of the market right now—or as [investor] Seth Klarman said it today, ‘a bunch of frogs in a pot of boiling water.’”
To which the Redditors said, “FUD!” There was no way a company that announced 400 to 450 store closures in September might be a bit overvalued when its stock catapulted above both General Mills and General Motors.
Citron has stopped commenting on GME stock after receiving so much hostility from Redditors, Left indicated.
To be fair, there is something to the price rise—investor Ryan Cohen, who co-founded petfood company Chewy, took control of three board seats last week. Cohen is expected to take the company from its spot near the food court into ecommerce.
Perhaps he can do Dogecoin next.
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