The Reddit-led market revolt fell apart on Tuesday as shares plunged at GameStop and Odeon owner AMC Entertainment, saddling hordes of enthusiastic day traders with massive losses.
Shares in the two key “memestocks” at the centre of last week’s market ruckus dropped 63pc and 50pc respectively in afternoon trading in New York, while fellow favourite BlackBerry plunged almost a quarter.
” saddling hordes of enthusiastic day traders with massive losses.”
Really? The graph doesn’t say that.
Standard question to the market ” Why have X shares risen?”
Standard reply from the market “More buyers than sellers, old boy.”
Share prices rise when bids do not find offers. It’s a signal that shares are not being bought & therefore not being sold.
“causing several hedge funds that had been betting against the firms to haemorrhage cash as they scrambled to cut their losses.”
That money’s gone somewhere. If the hedgies’ short operation was running before the price started to take off on 13 Jan, at a current 74.22 you can see who’s in the ordure.
My guess is there’s traders at Reddit have made some healthy profits.
“That money’s gone somewhere. ”
It’s gone to whoever was taking the margin calls. My guess is that would be the people who owned the shares before this all started and from whom the shares were borrowed in order to allow the hedgies to short.
That money should be repayable when the borrowed share is redeemed?
Probably not. In futures, yes, but in equities? I’d think it’s in an account at the clearing house….
Hmm. Filings for GME with the SEC are, probably normal, but interesting, nonetheless.
The hedge funds’ capitulation cost them $15 billion by some accounts. That money did not go to Gamestop, it went to real shareholders. Even spread around very unevenly, this has been a winning bet for the reddit guys.
Latecomers will have been burned. But some people just want a share certificate to hang on the wall to say “Yes, I was there”.
Whether the Redditors have actually lost money depends on when they bought the shares and when they sell them.
Also whether they can write any losses off against other income I should think.
Pity really, the US doesn’t have paper share certificates any more….
Do the Redditors really care? If there’s umpty-thousand of them chipping in $100 each or whatever, they probably think losing that – or part of it – is well worth it for the sake of sticking it to the enemy.