Stock Wars: Revenge of the short squeeze: market commentary
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Melvin Capital has exited its bet against GameStop, having lost billions of dollars after a battle with amateur traders who pushed up the share price of the game retailer and other companies it had bet against.
The hedge fund’s exit from the heavily traded stock, after it sustained significant losses, marks a triumph for retail traders co-ordinating on Reddit message boards.
The New York firm, founded by Gabe Plotkin, a protégé of Point72 founder Steve Cohen, was forced earlier this week to seek a $2.75bn cash injection from its larger rivals Citadel and Point72, after it had lost about $3.75bn, or 30 per cent, in the first three weeks of the year, according to two people familiar with the matter.
Shares of GameStop have rallied 685 per cent this year to $147.98, as of Tuesday’s closing level, with stock and options trading volumes skyrocketing over the past week as retail traders have piled in. The stock was quoted as high as $365.42 in pre-market trading on Wednesday.
Users on the popular Reddit message board r/wallstreetbets have bought shares of the retailer as well as large numbers of call options, which pay out if GameStop shares rise. The r/wallstreetbets page in recent days has been filled with screenshots of investment accounts posting multimillion dollar gains, with users egging each other on to continue buying up the stock. One trader used his winnings to pay off his student debt…
Michael Avery spoke to Wayne McCurrie, portfolio manager, FNB Wealth and Investments & Martin Harris, premium client manager at IG SA about the Robinhood traders who have slayed one goliath, the question is who is next?
The hedge fund’s exit from the heavily traded stock, after it sustained significant losses, marks a triumph for retail traders co-ordinating on Reddit message boards.
The New York firm, founded by Gabe Plotkin, a protégé of Point72 founder Steve Cohen, was forced earlier this week to seek a $2.75bn cash injection from its larger rivals Citadel and Point72, after it had lost about $3.75bn, or 30 per cent, in the first three weeks of the year, according to two people familiar with the matter.
Shares of GameStop have rallied 685 per cent this year to $147.98, as of Tuesday’s closing level, with stock and options trading volumes skyrocketing over the past week as retail traders have piled in. The stock was quoted as high as $365.42 in pre-market trading on Wednesday.
Users on the popular Reddit message board r/wallstreetbets have bought shares of the retailer as well as large numbers of call options, which pay out if GameStop shares rise. The r/wallstreetbets page in recent days has been filled with screenshots of investment accounts posting multimillion dollar gains, with users egging each other on to continue buying up the stock. One trader used his winnings to pay off his student debt…
Michael Avery spoke to Wayne McCurrie, portfolio manager, FNB Wealth and Investments & Martin Harris, premium client manager at IG SA about the Robinhood traders who have slayed one goliath, the question is who is next?