About This Source - Bloomberg QuickTake: Now
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Bloomberg Quicktake: Now published this video item, entitled “GameStop Rout Deepens to Erase $26 Billion in Value From Peak” – below is their description.
GameStop Corp.’s rally fizzled further Tuesday, meaning the stock has now given up almost 80% of the spectacular gains that were fueled by last month’s attack on short sellers from Reddit day traders.
The stock tumbled to $104 at 9:44 a.m. in New York, after triggering its first volatility pause of the day. The video-game retailer’s market value has dwindled by $26 billion to $7.4 billion from a Thursday intraday peak, though the stock is still up almost 500% year-to-date.
GameStop’s retreat has coincided with a sharp reduction in short interest after bearish investors appeared to cover their positions. That has loosened a squeeze on the stock caused by day traders who used Reddit forums to tout and bid up out-of-favor stocks that also included movie-theater chain AMC Entertainment Holdings Inc. and American Airlines Group Inc.
“It looks like the unwind of the short squeeze, where prices will start to reflect economic reality again,” said Maarten Geerdink, head of European equities at NN Investment Partners.
Other stocks recently favored by the Reddit community are also rapidly losing steam: AMC tumbled 42% and at $8 is more than 50% below last week’s intraday high. Express Inc. declined 29% and has lost about 70% of its value since peaking on Wednesday.
The declines come as short sellers reduce their interest, having sustained multi-billion dollar losses. The short interest in GameStop shares has tumbled to 36% of its freefloat, according to data from IHS Markit.
Tuesday’s drop came despite a loosening of restrictions on the amount of shares investors can buy using Robinhood Markets Inc. On Monday afternoon, the popular trading app started allowing users to purchase up to 20 shares of GameStop, up from a cap of one before the market opened.
The lower number of shares sold short could also deal a blow to day traders’ thesis that a higher stock price would only result in more gains as hedge funds who bet against the Grapevine, Texas-based company would need to cover their shorts.Bloomberg Quicktake: Now YouTube Channel
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In This Story: GameStop
GameStop (NYSE: GME) is an American video game, consumer electronics, and gaming merchandise retailer. The company is headquartered in Grapevine, Texas, United States, a suburb of Dallas, and operates 5,509 retail stores throughout the United States, Canada, Australia, New Zealand, and Europe as of February 1, 2020.
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In This Story: IHS Markit
IHS Markit Ltd is an American-British information provider based in London formed in 2016 with the merger of IHS Inc. and Markit Ltd.
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In This Story: Reddit
Reddit is a social news aggregation, web content rating, and discussion website. Registered members submit content to the site such as links, text posts, and images, which are then voted up or down by other members.