I saw him rise, I saw him feast, I saw his buildings fall!
GameStop (NYSE:GME) went from $43.03 a share to $325 in six trading days and back to $90 in just two.
In the “battle of the century between retail investors and institutions” in the US, big short seller Citron has lost out and said it will stop issuing short reports. Several other hedge funds have suffered heavy losses and are at risk of losing their positions. At the other end of the spectrum, some highly leveraged “US retail investors” have been bloodied and posted “willing to bet and lose” on the WSSB forum.
Retail firepower was scattered, WSB concept stocks were surrounded by segmentation
After plunging 30.77% on Feb. 1, Game Station opened more than 37% lower on Feb. 2, dropping more than 66% to close at $90 / share, down 60%.
At last week’s close, Game Station’s stock was trading at $325 per share. In just two trading days this week, the stock has dropped 72.3%, wiping out nearly $16.4 billion in market value.
In this “forced empty” war, skyrocketing is not only the game station a stock. After the success of the initial battle, “American retail investors” have also violently pulled up Gauss Electronics, AMC Theatres, Blackberry and many other stocks that had been short by institutions, “WSB concept stocks” in a moment of no two.
Even at the end of last week, investors on the WSB forum took a closer look at silver futures, which are even more risky to trade. Some investors wrote a long post on the WSB forum that the silver price should be $1,000 instead of $25, and the “rally” of retail investors briefly sent international silver futures soaring.
However, in yesterday’s game station share price slump at the same time, “WSB concept stocks” also suffered a collective heavy fall.
On Feb. 2, Gauss Electronics (KOS.O) closed down 42.86% at $20 a share, down 84.31% from its recent high of $127.45 a share. AMC Entertainment Holdings (NYSE:AMC) fell 41.05 percent to $7.84, down 61.49 percent from its recent high of $20.36 a share. BlackBerry (NYSE:BB) closed down 21.05% at $11.55 a share, down 59.85% from its recent high of $28.77 a share.
Silver futures, seen as the latest shorting target of the ‘U.S. retail market,’ also suffered heavy losses. Comex silver futures tumbled nearly 9 percent to close at $26.78 an ounce, the biggest daily drop in nearly six months. The day before, it had hit an eight-year high of $30.35 an ounce.
In fact, when someone on the WSB forum last week called on “American retail investors” to push up silver futures, there was a different view that “it’s risky to participate in silver trading, and we should stick to the game station.” “It’s a palanquin for Citadel and a lot of political and financial alchemists who are currently holding physical silver.”
The reporter of China Economic Weekly noted that after the big drop on February 2, some investors posted on the WSB forum that they were “willing to bet and accept defeat” and claimed that “Wall Street is a casino”.
However, some people summarized their experience and believed that under the guidance of the institutions, the insufficient funds of retail investors were seriously dispersed. They should have concentrated their limited firepower to continue to pull up the game stations, instead of attacking in multiple ways and finally being defeated one by one.
The three major US stock indexes and the “WSB concept stocks” fluctuate?
It is worth noting that although the game station and a number of “WSB concept stocks” plummeted, but on February 2, the three major stock indexes in the United States have closed up, once again close to the previous record high. At the close of trading, the Dow was up 1.57% at 30687.48; The S&P 500 was up 1.39% at 3826.31. The Nasdaq gained 1.56% to 13,612.78.
The reporter of China Economic Weekly noted that since the game station was pulled up by violence, the three major stock indexes in the United States and “WSB concept stocks” basically maintain a reciprocal relationship.
On February 1, Game Station fell 30.77%, Dow, S&P 500 and Nasdaq rose 0.76%, 1.61% and 2.55% respectively; On January 29, Game Station surged 67.87%, while the Dow, S&P 500 and Nasdaq fell 2.03%, 1.93% and 2%, respectively. On January 28, Game Station fell 44.29%, Dow, S&P 500 and Nasdaq rose 0.99%, 0.98% and 0.78%, respectively…
In this regard, a number of American research institutions said that the “American retail investors” unprecedented “forced short” action, has seriously affected the sentiment of the US stock market. “Short-selling” has cost hedge funds tens of billions of dollars and forced them to recoup their losses by selling large amounts of long-held blue chips, potentially triggering systemic financial risks. Therefore, the game station and other “WSB concept stocks” when the United States stock index fell collectively, and “game station people” fell when the three major stock indexes can go steady.
Goldman Sachs, the leading investment bank, believes that if retail investors continue to “push short”, it could trigger a collapse in the US stock market and could lead to the next financial crisis.
Nor can researchers agree on the outcome of the “battle of the century between retail and institutions in the US”.
Goldman Sachs has said publicly that retail solidarity will continue. The high level of U.S. household savings compared with the peak of U.S. stocks in 2000, coupled with more than $1 trillion in additional financial support, means retail investors have plenty of “ammunition,” but once again warned that if the sell-off continues, U.S. stocks will face risks.
JPMorgan and others believe that volatility and margin requirements for retail syndicated stocks have risen sharply, potentially hurting those who have profited from the positive momentum of the previous few weeks. Those losses could in turn slow overall retail inflows going forward, undermining an important support for the stock market. Monitoring the overall flows of US retail investors is therefore important for the future direction of the market.
In addition, it is widely believed that what U.S. regulators say will be particularly critical to the future direction of U.S. stocks.
The Securities and Exchange Commission (SEC) said Wednesday it would review recent trading swings that have sparked a surge in shares of companies such as Game Station and AMC Entertainment Holdings. The SEC also promised to carefully examine actions taken by brokerages that could “adversely affect investors or otherwise unduly inhibit their ability to trade certain securities.” “When abusive or manipulative trading activities prohibited by the federal securities laws are proven, we will take action to protect retail investors.”
President Joe Biden’s administration will look into the legal implications of last week’s rollercoaster stock trading, his top economic adviser said in a press release.
However, as of press, the United States official position on this matter, there is no substantive conclusion, nor publicly expressed support for which side.
article links：American retail investors in the "diversion plan"?
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