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IIf trading bitcoin isn’t creepy enough, give GameStop a try. It’s the Texas-based video game retailer that will be hard to beat like the stock market story of 2021. The stock price was $ 19 earlier this month, but hit $ 330 by mid-afternoon Wednesday in NY. There have been some downward bumps along the way, but the general direction has been unsustainably upward.
It must be unsustainable because nothing major has happened that dramatically improves GameStop’s business prospects. Exciting PlayStation and Xbox launches may be right around the corner, but the company remains a struggling brick and mortar retailer in the online age. Instead, kicking at GameStop has become a video game unto itself.
You could call the game “burn the bears” – the bears were short-selling hedge funds that had bet last year that the stock price had to keep falling. They didn’t have a Reddit forum called r / WallStreetBets, where hobbyist traders gather, in this case to spot a daring counterattack – an uprising to drive the stock price higher.
You have to admire the imagination. Short sellers had gambled so heavily on the GameStop catastrophe that they were vulnerable to any sudden changes. In the old days, private gamblers wouldn’t have been able to muster enough collective financial power to make a difference. Now, just like the pros, they have access to financial leverage in the form of commission-free derivatives (futures and options) to throw some sticks of dynamite into the mix.
The explosion forced hedge funds to cover their losses by buying stocks, which contributed to the bullish momentum. The phenomenon is not new, but it is difficult to think of another example on this scale. Two hedge funds, at least, have been severely scalded, which, according to the subreddit, was half the target for the year. It was about getting one on Wall Street.
In that sense, it has succeeded to a degree that seemed impossible. And, since short sellers are rarely popular, the world won’t cry over hedge fund losers. Instead, one reaction was to wonder where the Reddit entrepreneurial team will strike next. BlackBerry, another very short stock, has experienced similar dynamics. Even the 14% rise Wednesday in Pearson, a member of the FTSE 100 index, was attributed to short sellers running up the hills.
Where does the story go now? Well, despite calls for regulators to investigate possible market manipulation, that line of argument seems not to be a start. Fans who communicate in chat rooms to discuss an action do not amount to a conspiracy; the practice is as old as the Internet.
Instead, after a few more rounds of excitement, expect the game to stop in the traditional way – those who are late to the party and those who stay until the end will learn the hard way that a paper win is not. the same as cash. .
The smart money will be ready by then, of course. But if GameStock’s common sense value is $ 2 billion, and not the $ 24.5 billion that the stock price implies on Wednesday, the drop will be brutal.
Don’t blame AstraZeneca for the dispute with the EU
On which side, AstraZeneca or the European Union, do you think you have read the vaccine supply contract correctly? The bet here is that AstraZeneca’s Pascal Soriot, a chief executive who has always been commendably disinterested in turns, was simply delivering some harsh truths to Brussels in his interview with the Italian newspaper La Repubblica on Tuesday.
Bottom line: AstraZeneca is obliged to do its “best effort” to comply with the EU order on time and that in the case of “failures” in specific EU plants, doses cannot be redirected from the Kingdom Kingdom without the approval of the UK Government. The EU’s position is that its own delivery terms are strict and, now that EU plants cannot fulfill initial orders, UK sources should be tapped.
The company may have signed two ambiguous contracts at this critical point. But it seems unlikely. Biological vaccines are difficult to produce, especially at high speed. The event that has occurred (delays in a dedicated supply chain) will surely have been anticipated and covered.
It’s also pretty clear that the UK Vaccine Task Force, which appears to have played a more blind role, insisted that UK supplies should go to the UK first. Given that that contract was signed three months before the EU one, AstraZeneca’s lawyers must have reflected the fact.
The contract will probably be leaked by someone very soon. Meanwhile, sympathies are with AstraZeneca. Along with the University of Oxford, it has done wonders and does not deserve to be a political football.
