A social media-driven trading frenzy for GameStop, AMC Entertainment calls for investigation

Shares of Gametop and AMC Entertainment rose for the fourth day on Wednesday, forcing the hedge fund to retreat from heavy losses and start calls to investigate the social media-driven trading frenzy.

The short-seller Citron is a target for some individual traders who have helped drive huge gains for several niche Wall Street stocks over the past week, with a video post stating that it would leave its bets on Gametop shares Have given.

Commentators and lawyers asked to investigate the move, with Nasdaq chief Adena Freedman saying that exchanges and regulators need to pay attention to the ability of “pump and dump” schemes operated by the chatter on social media.

Some people on Wall Street are wondering if months of stellar overall gains have driven stocks in the bubble zone.

The Securities and Exchange Commission declined to comment.

Mainstream commentators have questioned the appropriateness of moves in a number of heavy stocks in recent times, at a time when some on Wall Street are wondering if the stock as a whole operated in the bubble zone over the course of months is.

GameStop’s stock has risen nearly 700 percent in the past two weeks, pushing the struggling video retailer’s market value from $ 1.24 billion to over $ 10 billion. BlackBerry is up 185 percent and certainly up for its best month ever.

Together with AMC and Nokia Oyj, both were again the most traded in pre-market deals, with Reddit discussion threads with nonsense about shares again.

Deutsche Bank strategist Jim Reid said, “These are not normal times and (reddit) … it’s fascinating to see, I can’t help but think this is likely to end well for someone Is not. “

The advent of easy-to-access apps such as Robinhood, which allows ordinary Americans to make stock market trades at almost no initial cost, has led to a surge in direct investment over the past year as trillions of dollars of official stimulus are higher in the market .

At Gametop, the retail military has pitted itself against some institutional short-sellers – a traditional area for hedge funds – who promote a decline in those companies and bet they judge them as weak.

According to analytics firm S3 Partners, short-sellers mark-to-market at GameStop were $ 5 billion lower on a net-of-financing basis in 2021, with a loss of $ 876 million at the beginning of Tuesday.

Late on Tuesday, Baron reported that the top securities regulator in Massachusetts believes that trading in Gametop stocks suggests that there is something “systematically wrong” with option trading around the stock.

Others say that even the investors who make the trades are at the end of the day.

“The SEC has investigated Robinhood before, but when you have a structure that allows a zero-cost trading platform to operate – how do you stop that flow?” Said Neil Campling, Head of Tech Media and Telecom Research at Mirabaud Securities.

Trading in GameStop’s stock halted nine times on Monday and five times on Tuesday.

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