GameStop slides, silver spree stalls as retail traders run out of road
GameStop slides, silver spree stalls as retail traders run out of road
(Reuters) -GameStop shares sank on Tuesday and a silver buying spree led by small investors subsided as the Reddit-driven trading frenzy that has shocked global financial markets over the past week started to show signs of fizzling out.
The videogame chain’s shares, which have see-sawed in a slugfest that has seen billions of dollars gained and lost by hedge funds and other financial investors, were down 42% at $130 in pre-market trading after scaling a high of $483 last week.
Spot silver prices, an alternative focus in the battle between a pack of small traders and Wall Street hedge funds, fell more than 5% after hitting an eight-year high a day earlier.
Analysts said the silver pullback may show the limits of small investors’ impact in a large market, while posts on the popular Reddit forum, WallStreetBets, ranged from those giving up on the GameStop trade to calls to stick with the stock.
“The stocks side of things has faded because they all had a look at silver yesterday, but my feeling is they’ll be back, depending on whether retail trading platforms will allow you to buy more than one share,” said Keith Temperton, an equity sales trader at Forte Securities.
Another Reddit favorite, movie theater operator AMC, slumped 33% although it remains 500% higher than the start of the year, before the organized band of small buyers piled in and forced a “squeeze” that required big funds to close short positions by buying shares at very high prices.
Online broker Robinhood, on whose platform much of the buying and selling has taken place, confirmed on Monday it had raised another $2.4 billion from shareholders following a $1 billion boost last week as it strives to meet demands for additional collateral to cover trades.
The broker has also held talks with banks about raising another $1 billion in debt, people familiar with the matter told Reuters.
Analysts at financial institutions continued to predict the action, which has drawn the attention of regulators, politicians and celebrities, was likely to fade, it was just a question of how soon.
