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GameStop shares slump as Reddit rally ebbs

The volatility has drawn the attention of regulators
Last Updated : 09 February 2021, 05:41 IST
Last Updated : 09 February 2021, 05:41 IST

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Shares of videogame retailer GameStop Corp slumped on Monday, losing ground along with a slew of other social media-hyped stocks that took investors on a wild ride earlier this month.

GameStop and other "meme stocks," including cinema operator AMC Entertainment Holdings Inc and headphone maker Koss have seen wild gyrations in their share prices over the past two weeks as amateur investors on forums such as Reddit's WallStreetBets acted in concert to bid up stocks that some US funds had bet against.

The volatility has drawn the attention of regulators, although US Treasury Secretary Janet Yellen said on Sunday it was too soon to say whether new policies or regulations were needed.

On Monday, GameStop shares, which soared from about $20 early in year to $483 on Jan. 28, rose before the U.S. stock market opened. But they closed down 5.91 per cent at $60. AMC shares dropped 9.5 per cent and Koss shares lost 4.9 per cent.

Trading volumes in GameStop also appeared to be trending lower: Some 25.5 million shares traded on Monday, compared with a record of 197.16 million shares on January 22. Still, the 10-day average volume of about 86.1 million shares was well above the stock's 50-day moving average volume of roughly 37.5 million.

Focus shifted to other corners of the market after billionaire Elon Musk's electric vehicle company Tesla Inc revealed it had invested $1.5 billion in bitcoin, driving a 16 per cent surge in the world's most widely held cryptocurrency to over $43,000.

On WallStreetBets, some denizens exhorted one another to stay in GameStop stock, while others waxed ironic.

"Whoa! There are people still in GME? LOL," wrote user possumtree.

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Published 09 February 2021, 05:41 IST

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