It hasn’t been a good day for WallStreetBets, as GameStop’s stock has plummeted today. AMC, the community’s other bet, dropped as well. But unlike previous dips, the stocks don’t appear to be rallying. Prices stayed low for the entire trading day, something that hasn’t happened since WallStreetBets became a household name one week ago.
When the market closed today, the price of GameStop was $90 even, an 81 percent drop from GameStop’s peak at $483, and a 58 percent drop from its price of $218 on Friday evening. AMC is down too, closing today at $7.82, which is a 61 percent drop from its peak at $19.88.
It’s hard to believe that in August of last year, GameStop was trading at $4.50. Between then and last week, some investors bet that the stock was undervalued, driving it up to around $30 a share. Then, the WallStreetBets subreddit decided it would take the stock to the moon, punishing those betting against it and attempting to make money in the process. The idea of buying at $4 a share and selling for $400 obviously captured the public’s imagination, and millions rushed to give trading a try as the GameStop meme went mainstream — taking AMC and others along for the ride as investors realized they could pump those stocks too.
As to whether this is the end of GameStop’s wild ride, it’s almost impossible to tell. The past week’s peaks, dips, and drops have been detached from the underlying businesses.
Part of that is the culture of WallStreetBets itself. Praising people for not selling their stocks, and ridiculing those that do is a recipe for a community that’s going to be stubborn. And now it’s started telling itself that the drop is due to hedge fund market manipulation.
If this news has made you feel like reading about other stock market shenanigans, CNBC has an article that compares what’s happening now to the 2008 Volkswagen short squeeze, and Vox’s Recode has an interview with Henry Blodget, who was involved with the Dotcom bubble.
As for the people who have deep losses from today’s dive? They’re hoping for a rally, so they can at least sell for what they bought in for. Some, like Dutch student Evan Oosterink, are counting on it — he bet about $10,000, which represented “years of savings from his parents and some government college loans,” The Washington Post reported. He lost about $9,000 today, but is still holding the stock in the hope that he can recoup his loss. “Being a part of WallStreetBets, it’s like a religion you’re devoted to,” he said to The Washington Post.
It was lovely reading those stories on Reddit about how GameStop stock changed their lives and will help them pay medical bills, save pets etc and I really, really, really hope they sold pic.twitter.com/Kcjwf4NNnN
— Jason Schreier (@jasonschreier) February 2, 2021