Strange news on the stock exchanges this morning – Gamestop the notorious “stonk” caught over a month ago in a tug-of-war between hedge funds and private investors, is up again to the tune of around $250 per share as of press time.
At the end of January, GME was up over $400, which indicated a thousand-percent increase in just a few days.
Quickly the news came out that hedge fund traders had shorted this technology stock, thinking that Gamestop’s business model would soon become obsolete. However, independent groups of creditors and others banded together to ruin the strategy of these money-moving whales, going long on Gamestop and driving its price ever upward.
After the dam broke, GME went back down under $100, which makes today’s rally pretty interesting.
AMC, another stock that was beloved by grassroots investors trying to make their own mark on stocks, is also up: at $10.50 from recent lows of $5.50.
Why are these popular efforts to go long on GME and AMC getting traction?
Essentially, online trading has made it abundantly easy for people to get together and decide to pile onto a particular equity.
Despite frantic attempts by regulators and others to try to find evidence of market manipulation, it seems clear that there’s nothing wrong with telling people that you invested in something. The prospect of prosecuting grassroots investors for sharing enthusiasm is so ridiculous that it only took several days to make all of that go away into the next news cycle.
Now the financial markets have to reckon with certain realities – the Internet and agile trading platforms aren’t going anywhere, and neither is the new investor sentiment that fractured the market over Gamestop and other contentious assets.
“So let me get this straight:,” wrote former U.S. Labor Secretary Robert Reich at the news. “Redditors rallying GameStop is market manipulation, but hedge fund billionaires shorting a stock is just an investment strategy?”
Look for more movement in these volatile stocks.
