Internet: Online article triggers new price jump in Gamestop shares

Internet: Online article triggers new price jump in Gamestop shares

At the beginning of 2021, online influencers duped Wall Street with a campaign surrounding the shares of the retail chain Gamestop. Is there a new edition now?

An investor who caused headline-grabbing price jumps in the shares of video game retailer Gamestop a good three years ago appears to be at work again. Trader Keith Gill’s account on the online platform Reddit published a screenshot showing him buying Gamestop shares and options for around $175 million.

The price rose by 21 percent to 28 dollars, and in after-hours trading there was a further increase of a good eight percent. During trading, the share briefly cost twice as much as it did on Friday.

According to the screenshot from Gill’s account, he bought five million Gamestop shares at a price of just over $21. The recent jump in the share price has therefore given him a significant gain in value. But even greater profits are in store for the options to buy Gamestop shares at a price of $20, which expire on June 21.

Is the screenshot real?

At the same time, it remained unclear whether the screenshot was authentic – and whether he still controlled the accounts on Reddit and other social media platforms. His profile on Twitter’s successor service X had already returned in May after a break of several years, triggering price increases at Gamestop.

The Wall Street Journal reported that the E-Trade trading platform, which belongs to the Morgan Stanley bank, was considering excluding Gill. The Securities and Exchange Commission (SEC) is also looking into trading in options on Gamestop shares in recent weeks, it said, citing informed sources.

How influencers drove up the share price

Gamestop – like many brick-and-mortar chains – is struggling with competition from online retailers. As a result, the share price has been on a downward trend for a long time. The stock market was also betting on further declines. During the Corona pandemic, the stock became a popular object for so-called short sellers who sell borrowed shares.

They are betting that they will be able to buy the shares later at lower prices before they have to be returned. They pocket the difference as profit. However, short sellers in Gamestop accumulated heavy losses in early 2021 after Gill and other online influencers made the stock popular. The unlucky traders had to chase after shares that had become scarce on the market, which drove the price even higher.

Source: Stern

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