GameStop shares fall 60 percent as Reddit-driven short squeeze loses steam
GameStop stock plummeted Tuesday, losing more than half of its opening value and falling to its lowest level in a week.
Shares of GameStop plunged to $90 by the end of Tuesday trading, a 60 percent loss that shaved $135 from its opening price.
GameStop stock has fallen steadily since Thursday after hitting a peak of $483, roughly 1,800 percent higher than its price at the start of the year.
The brutal two-day stretch for GameStop may be the death knell for a Reddit-organized crusade against hedge funds who spent billions shorting the struggling retailer’s stock, betting it would continue to lose value.
Members of the Reddit subforum r/WallStreetBets drove up the price of GameStop’s stock by steadily buying shares in an attempted short squeeze before momentum began to fade.
GameStop’s losses also came on a strong day for the market overall, with all three major U.S. stock indexes closing Tuesday with gains of roughly 1.5 percent. Other stocks target by Reddit traders for short squeezes also faltered Tuesday, including AMC Entertainment (down 2.6 percent), BlackBerry (1.4 percent) and Nokia (0.7 percent).
Whether GameStop shares rebound remains to be seen, given the incredible volatility driven by the viral rallies and devoted nature of some buyers. Even so, GameStop stock continued to lose value in after-hours trading, implying further losses Wednesday.
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