GameStop has seen its share prices nearly double overnight after it became the focal point of a battle between Wall Street and smaller independent investors.
GameStop’s stocks shot up over 92 per cent from $76.74 to $147.98 throughout Tuesday as thanks to an army of small day traders who congregate on Reddit.
The Redditors sought to drive up the stock price of GameSpot in hopes of ruining Wall Street bets against the retailer, which recently reported plans to close 450 of its stores after a difficult year.
Prominent short-seller Citron Research announced last week that it had shorted GameStop stock, stating that the company was “pretty much in terminal decline”.
This sparked the David and Goliath battle, with one Reddit user stating in an open letter to CNBC: “We don’t have billionaires to bail us out when we mess up our portfolio risk and a position goes against us.
“We can’t go on TV and make attempts to manipulate millions to take our side of the trade. If we mess up as bad as they (Citron Research) did, we’re wiped out, we have to start from scratch…”
They added “I sincerely hope they suffer. We want to see the loss porn”.
Around $4.66 billion worth of GameStop stock, representing around 71.66 million shares, is currently shorted.
These bets have now cost Wall Street a total of $6.12 billion, including $2.79 billion on Monday.
In response, Citron Research’s Andrew Left told Reuters: “If I had never been involved in GameStop and came to this right now, would I still short this stock? 100 per cent,”
“This is an old school, failing mall-based video retailer and investors can’t change the perception of that.”