The GameStop saga, back on Wall Street: flash in the pan or marathon?

A person looks at a graph on his smartphone showing the crazy evolution of the GameStop (GME) stock on Wall Street on February 17, 2021 (AFP / Chris DELMAS)

After shaking the financial world at the end of January due to a speculative buying spree, the video game store chain GameStop is once again talking about it on Wall Street.

The stock more than doubled on Wednesday and climbed 19% on Thursday, extreme volatility that led the stock operator to temporarily suspend it several times.

Spotlight on the new episode of this stock market saga, which fascinates beyond financial circles as some want to see the opposition between the little people and the financial barons.

– Why this new surge? –

GameStop’s sharp rise, listed on the Nasdaq under the symbol GME, began the day after the announcement of the resignation of its chief financial officer, Jim Bell, who will officially step down on March 26.

This decision is not motivated by “a disagreement with the company on any subject relating to the activities, regulations or practices of the company”, assured GameStop in a document sent to the US stock market policeman.

However, according to the Business Insider site, which cites anonymous sources familiar with the matter, Mr. Bell was “fired” by businessman Ryan Cohen, who recently entered the capital and the board of directors of the company. firm.

Mr. Cohen, co-founder of the online pet products store Chewy, has a reputation for pushing the executives of companies in which he is a shareholder into practice on recipes that he says will put the company on. the road to success.

Beyond the departure of the financial manager, there is no real new information justifying the new outbreak of the GameStop title.

In the wake of GameStop, other actions particularly appreciated by small carriers, often qualified as “same stocks” or popular actions on internet forums, took advantage of the new speculative wave.

This was particularly the case for the manufacturer of headphones Koss (+ 17%).

– What happened in January? –

At the end of January, an army of amateur investors, notably exchanging their advice and opinions on a popular forum on the Reddit site, had decided to go massively to GameStop, pushing up its price on the stock market.

By acting in this way, these stock marketers had in particular wanted to prove wrong to large investment funds and the barons of Wall Street, who had on the contrary bet on a collapse of GameStop, in view of its mediocre financial results, its economic model visibly outdated and its gloomy growth prospects.

Subsequent analysis showed that the GameStop epic was not only akin to a fight between David (the small carriers) and Goliath (the hedge funds) and that other big funds had also sought to profit from it.

The “fight” had moved on television sets and in Congress where the various protagonists were put on the grill.

Parliamentarians are investigating whether hedge funds and retail brokerage platforms, such as Robinhood, have attempted to manipulate the market to limit the losses of professional financiers.

– Can the increase last? –

After peaking at over $ 347 on January 27, GameStop action fell back to around $ 40 last Friday.

It was $ 108.73 on Thursday.

In view of these sharp movements, it is difficult to know whether the stock will hold up, rise again, or even exceed its price last month, or else collapse.

“The stock market activity around GameStop is further proof of the transformation of the markets,” said Thomas Gorman of law firm Dorsey Whitney.

“The fight between small investors on the one hand, using brokerage platforms like Robinhood, and large hedge funds on the other is not an exceptional event,” continues this specialist in stock market regulation. “Deep-sea funds can no longer simply step in and bet down on struggling companies.”

On Reddit, the members of the WallStreetBets forum were in any case determined to do everything to support the action.

“I feel like the people who have been keeping GME for the last month are stranded at the top of Everest and we have built a rescue helicopter out of tin foil and used auto parts,” wrote a user using the pseudonym Healthy_Mammooth_1066.

“Hold on, diamond hands (Reddit jargon expression to qualify an investor determined to take a position despite the risks, note). Help is coming.”

dho / lo / rle

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