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GameStop Breaks Below $100 as Rout Erases $28 Billion in Value
Posted
February 2, 2021
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6:19Now PlayingGameStop Corp.’s rally came to a screeching halt this week as the shares dropped below the $100 milestone level.
The stock tumbled to $75 at 10:49 a.m. in New York, meaning it has now given up nearly 85% of the spectacular gains that were fueled by last month’s attack on short sellers. The video-game retailer’s market value has dwindled by more than $28 billion to $5.8 billion from a Thursday intraday peak, though the stock is still up more than 300% year-to-date.
GameStop’s retreat has coincided with a sharp reduction in short interest after bearish investors appeared to cover their positions. That has loosened a squeeze on the stock caused by day traders who used Reddit forums to tout and bid up out-of-favor stocks that also included movie-theater chain AMC Entertainment Holdings Inc. and American Airlines Group Inc.
“It looks like the unwind of the short squeeze, where prices will start to reflect economic reality again,” said Maarten Geerdink, head of European equities at NN Investment Partners.
Other stocks recently favored by the Reddit community are also rapidly losing steam: AMC tumbled 53% and at $6.19 is two-thirds lower than last week’s intraday high. Express Inc. declined 43% and has lost about 80% of its value since peaking on Wednesday.
The declines come as short sellers reduce their interest, having sustained multi-billion dollar losses. The short interest in GameStop shares has tumbled to 36% of its freefloat, according to data from IHS Markit.
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