The Wall Street Bets saga is undoubtedly the most interesting thing that happened to the global financial markets in the past few months. A group of Redditors managed to cause mayhem on Wall Street, but is the game over?
January was an exciting month. A group called Wall Street Bets propelled a movement that evolved into a protest against Wall Street in the face of large hedge funds. Millions of people weighed in to exploit the fact that some funds had been overly exposed to their short positions on certain stocks, namely GameStop’s shares ticked GME.
In days, the stocks surged by more than 600%, causing a massive short squeeze and absolute chaos for certain Wall Street hedge funds. Billions were lost.
However, what happened in the process was even more indicative of the inherent issues that are riddling the current system. Ameritrade halted trading of related stocks, while Robinhood went as far as to allow users only to sell but not buy them. This caused many people to believe that the platform attempted to help hedge funds in limiting their losses by disallowing users to propel the prices even higher.
NASDAQ’s CEO even went on to say that they could potentially halt trading in cases of increased social media chatter. Many thought that these are decisions in direct opposition to the principles of the free market, and what is worse – moves aimed at protecting ‘smart money’ while leaving retail investors in the dust.
A few days later, it appears that the mania surrounding some of the most hyped stocks, namely GME and AMC, has settled and perhaps even faded away.
Upon today’s market opening, GameStop stocks are down about 63% from their opening price at the time of this writing.
The stock is currently trading at around $90, which is roughly around 80% below its high, reached on January 28th.
On the other hand, there’s AMC, the stock of AMC Entertainment Holdings. At the time of this writing, it’s trading at around 50% below its opening price.
It appears that the hype-driven Wall Street Bets rally has ran out of fuel. Nevertheless, the genie is out of the bottle, and it’s interesting to see how the situation will develop going further.
