GameStop shares lose nearly a third of their value on Monday following 400% short-squeeze spike last week

FAN Editor

GameStop shares fell more than 30% and were briefly halted on Monday as the Reddit-fueled frenetic trading extended into February.

Shares of the bricks-and-mortar video game retailer closed down 30.8% on Monday. GameStop jumped as much as 18% to $384.89 in premarket trading.

The stock surged 1,625% in January as point-and-click investors piled into the name while hedge funds rushed to cover their losses from shorting the stock.

The astronomical rally has inflicted a mark-to-market loss of almost $13.5 billion to hedge funds with short positions against the stock, according to data from S3 Partners through Friday’s close.

Robinhood and other trading apps continue to limit buying of GameStop stocks and options contracts, along with those of other heavily shorted names, following a week of hugely volatile trading due to a retail trading frenzy led by 5 million-strong Reddit thread “WallStreetBets.”

Currently, Robinhood only allows clients to buy 20 shares of GameStop, unless they already own shares 20, in which case the client can’t buy any shares. Robinhood eased the restrictions on Monday before announcing another $2.4 billion cash injection.

Limitations are also in place for AMC Entertainment, BlackBerry, KossExpress, Nokia, Genius Brands International and Naked Brand Group.

AMC Entertainment closed up 0.3% after jumping more than 20% earlier in the session.

Most of the other restricted names were lower on Monday, including Express, which is down nearly 17%, Koss, which dropped about 45%, and Naked Brand Group, which fell nearly 14%.

Genius Brands, BlackBerry and Nokia were the restricted names that traded higher on Monday.

Short selling is a strategy in which investors borrow shares of a stock at a certain price on expectations that the market value will fall below that level when it’s time to pay for the borrowed shares.

— CNBC’s Yun Li contributed to this report.

Free America Network Articles

Leave a Reply

Next Post

Dow jumps 220 points, rebounds from worst week since October as market looks past trading mania

Stocks jumped on Monday, the first session of February, as Wall Street appeared to shake off concerns about a speculative retail trading mania that largely drove the market’s worst weekly sell-off since October. The Dow Jones Industrial Average rose 229.29 points, or 0.8%, to 30,211.91, led by Microsoft and Visa. […]