NEW YORK: GameStop Corp shares halved in value yesterday and silver prices retreated as the Reddit-driven trading frenzy that has shocked global financial markets appeared to fizzle, at least for now.
The videogame chain’s shares, which have seesawed wildly with hedge funds and other investors making or losing billions of dollars, were last down 51 per cent at $108.99. They are now worth only a quarter of their high of $483 last week.
Earlier yesterday, short sellers were up $2.5 billion in paper gains, cutting their year-to-date losses to $10.1bn, according to S3 Partners.
Other so-called meme stocks caught up in the Reddit rally also sold off. AMC Entertainment Holdings, Express, Naked Brand Group and Koss Corp each dropped by about a third, while BlackBerry and Bed Bath & Beyond showed double-digit percentage losses. Nokia’s US-listed shares fell 8pc.
“The rally is likely over (since) the short positions are pretty well taken care of,” said Paul Nolte, portfolio manager at Kingsview Asset Management.
“That’s the game you play when you do this thing. It can work for a while until it stops working and when it stops working, it reverses pretty quickly.”
Online broker Robinhood, on whose platform much of the buying and selling has taken place, raised trading limits on GameStop, AMC and other stocks, according to an update on its website yesterday.
Analysts predict that the market action, which has drawn the attention of regulators and politicians, was likely to fade, and said it was just a question of how soon.
The GameStop saga is likely to expedite a regulatory review of the role non-bank firms play in markets, experts said.
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