For no apparent reason: Gamestop shares rise 104% – business

The excitement surrounding troubled video game retailer Gamestop never ends in the American financial market. After heavy losses in the previous weeks, the US company’s share price, which had become the toy of speculators, nearly doubled on Wednesday without a clear reason being immediately apparent.

Given the conditions on US stock exchanges, longtime partner of legendary star investor Warren Buffett, Charlie Munger, warned of excesses.

The vice president of Buffett’s investment company, Berkshire Hathaway, appears to be concerned about the recent turmoil in the US financial market. The 97-year-old man said at the annual general meeting of the American media group Daily Journal Corporation on Wednesday, at the annual general meeting of the American media group Daily Journal Corporation, price shenanigans like Gamestop shares are signs of a ” bubble irritation ”that has to end badly at some point.

Gamestop shares were temporarily suspended from trading in the middle of the week and eventually closed up 104 percent at nearly $ 92 (around € 75). After hours of trading it continued to fluctuate violently, at times the price soared around 100 percent. The day before, Gamestop had announced the departure of CFO Jim Bell without giving a reason.

The US media later reported that the manager had to resign under pressure from influential shareholders because there were disagreements on the strategy. Investor Ryan Cohen is said to have played a key role here, assuming a position on the Board of Directors in January. Many speculators consider him a bearer of hope for a comeback, because he had already successfully turned pet products retailer Chewy upside down.

Old stock market master Munger doesn’t think about the hype for games. According to their critics, the speculation frenzy reveals a dangerous new culture in which cheap brokers like Robinhood encourage people to play stocks, as they do at horse betting. In fact, Gamestop has long been in crisis. However, spurred on by organized hobbyists on the internet, the company’s shares had rebounded impressively in the past month.

That, in turn, broke billions in losses for some hedge funds that had bet on a price drop. By the end of January, the stock had hit a record high of more than $ 483, but the rally ended quickly. The price turbulence around Gamestop and a few other companies on the US stock exchanges has already had consequences that continue. US authorities are investigating the incidents and investigating possible market manipulation.

With its easy-to-use app, discount broker Robinhood, which is particularly popular with younger investors, was also criticized. In particular, the fact that Robinhood restricted trading hot stocks like Gamestop during last month’s price explosion so that they could only be sold caused a lot of problems. Robinhood strongly denied any suspicions of hedge fund collusion.

Charlie Munger has now also strongly criticized Robinhood, but not because of the trade restrictions, but because he considers the app to be more of a gambling provider of sorts than a trusted broker. Robinhood runs a “dirty” business, in which users are attracted free of charge, while the company receives money from Wall Street actors for the mediation of its transactions and therefore encourages trade as much and risky as it is possible.