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More and more Reddit merchants seem to be selling their Gamestop stock.
(Photo: Reuters)
San Francisco The Reddit forum posts “Wall Street Bets” sound like slogans to hold in a trench: “Don’t sell! I repeat: DO NOT sell! ”Writes a member of the group with more than eight million members. “They don’t allow us to buy so they can push the course further. This is your last attempt to get out of there. Stand firm! “
The forum is now world famous because in the days before it had pushed the share price of the troubled computer game retailer Gamestop from a good $ 40 to more than $ 300 in a week with frenzied buying campaigns. On paper, many Wall Street Bets have gotten rich in recent days, contributing billions of dollars to the hedge fund Melvin Capital, which had bet against stocks.
But now the stock is falling into a black hole: At 11 a.m. New York time, when the member wrote his appeal, it fell from $ 227 the day before to $ 91. In two business days, Gamestop has lost three-quarters of its value. One posts a screenshot of his trading app showing a loss of just under $ 12,500. Another confirmation for the purchase of 20,000 more shares.
Then there’s the reinforcement, in the form of billionaire Mark Cuban, who comes to the forum for a round of questions, an AMA call, or “Ask Me Anything.” “Anyone who can afford to have the action should have it,” writes Cuban, who as a jury for the “Shark Tank” startup show is something like American Frank Thelen. But he himself did not invest in Gamestop.
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For a short time, Gamestop is back up to $ 137. When Wall Street ended trading at 4pm, Gamestop was back at $ 90, 60 percent in the red. Other stocks that “Wall Street Bets” has driven in recent days also fell on Tuesday: the AMC theater chain, which is on the brink of bankruptcy: minus 41 percent, the smartphone maker Blackberry, once invaded by Apple: minus 21 percent.
Robinhood needs billions in loans
“Wall Street Bets” calls its members “The Degenerates.” The forum has a cult of outcasts now seeking revenge on Wall Street hedge fund billionaires. Most of the group asked for a position, but no one knows how many are secretly fleeing. In any case, a culprit for Gamestop’s downfall has been found: the Robinhood commercial app, which many of them use.
The San Francisco company had severely restricted the Gamestop paper trade in recent days. Founder Vlad Tenev blames his clearinghouse, which actually trades for Robinhood on the markets and recently demanded significantly higher collateral to trade the volatile stocks.
Robinhood can hardly be at fault for the current accident. After the startup received two financial injections totaling $ 3.4 billion from its investors in a few days, it was able to expand trading in Gamestop and other volatile stocks again. A Robinhood trader can currently buy 20 Gamestop shares at a time; Friday was just one.
Rather, it appears that the ranks of the “degenerates” are shrinking. While Mark Cuban calls for perseverance, Dave Portnoy gives up. The founder of the popular sports and pop culture blog Barstool Sports writes to his 2.3 million Twitter followers that he lost $ 700,000 on shares of Gamestop and AMC, and now he’s gone. “Vlad and his company stole my money and they have to go to jail.” The rarely docile Portnoy’s word applies more to Reddit’s group of daily traders than to Warren Buffett.
It is unlikely that Robinhood did anything illegal when it restricted trade. But the company has not become popular either with its users or in politics: On February 18, Tenev had to testify before the finance committee of the US House of Representatives. The Gamestop chapter is far from over.
Plus: ‘We’re in the Wild West’: Reddit investors keep markets on hold
