GameStop shares were more than halved on Tuesday as losses piled up on preferred shares by the army of day traders who organized themselves on social media site Reddit.
The steep drop triggered trading in GameStop at some point, as automatic brakes set in to calm nervous trading.
GameStop along with others like BlackBerry and AMC Entertainment have become synonymous with the new wave of retail traders that has taken hold of U.S. financial markets since the pandemic hit the country last year. Last week’s rally in GameStop stocks inflicted billions of dollars in losses on hedge funds that had bet the company’s shares would fall, resulting in the bailout of Melvin Capital from Citadel and Manager’s Point72 Asset Management. starring Gabe Plotkin.
GameStop fell 65% by mid-morning in New York City, while AMC shares fell 50% and BlackBerry fell 20%.
“It was inevitable – it goes back to the age-old premise that the stock market, ultimately, at the margin is driven by greed and fear,” said Mike Mullaney, director of global markets research at Boston. Partners. “I feel bad for anyone who jumped into this trade last week, especially on the buying side.”
Traders on the Reddit r / WallStreetBets bulletin board repeated the mantra of “hold the line”, telling other investors who had crammed into AMC and GameStop not to sell. One was quick to offer support to other investors who have called for increasing losses, writing: “It is not a loss until it is realized.