It was fun while it lasted, eh? Last week we were all reveling in the sudden and meteoric rise in GameStop stocks as rogue investors plotted to stick it to hedge fund managers. This week, we’re seeing an entire reversal of fortune as the GameStop stocks come crashing back down to earth. While the stock flourished amid a buying frenzy, shareholders could be in for a rude awakening come Monday.
As of writing, GameStop had its worst week ever on paper, as stock value plummeted over 80%. It now sits at just over $66 a share, after sitting at an astonishing $347 a share at its peak. Regardless, the stock is still doing well, by comparison, considering it started the month of January at about $17. In terms of finance, with the volatility of the stock market, coupled with this Reddit fueled buying spree, GameStop has effectively lost about $20 Billion in value. Looking at things from a broader perspective, some might say the hedge fund hijack actually did work, as GameStop stock is no longer considered a “failing” portfolio.
There are a few more major events to watch for that will really determine the long-term impact of all this chaos. One of which is GameStop’s quarterly earnings call in March. There, we’ll finally be able to hear the true financial impact of the sudden rise and fall of their stock price. The second event is a much bigger wildcard as it will depend largely on the intentions of regulators. Treasury Secretary Janet Yellen is slated to meet with heads of the Securities and Exchange Commission to discuss exactly how this recent trend in volatility can affect the market in the future.
One thing is for certain, these rogue investors have shown the power of community purchasing. Maybe there is a lesson implanted in the midst of all this pandemonium.