{"id":251828,"date":"2021-01-27T18:23:00","date_gmt":"2021-01-27T18:23:00","guid":{"rendered":"https:\/\/usa.timesofnews.com\/breaking-news\/breaking-news\/nasdaq-temporarily-shuts-down-stock-trading-after-internet-trolls-destroy-hedge-fund-with-gamestop-stock.html"},"modified":"2021-01-27T18:23:00","modified_gmt":"2021-01-27T18:23:00","slug":"nasdaq-temporarily-shuts-down-stock-trading-after-internet-trolls-destroy-hedge-fund-with-gamestop-stock","status":"publish","type":"post","link":"https:\/\/usa.timesofnews.com\/breaking-news\/breaking-news\/nasdaq-temporarily-shuts-down-stock-trading-after-internet-trolls-destroy-hedge-fund-with-gamestop-stock.html","title":{"rendered":"NASDAQ temporarily shuts down stock trading after internet trolls destroy hedge fund with GameStop stock"},"content":{"rendered":"

\u201cWe are actively monitoring social media chatter and will halt stock if we match chatter with unusual activity in stocks,\u201d<\/em> NASDAQ CEO Adena Friedman announced on Wednesday morning. Speaking to CNBC, Friedman demanded regulators intervene to stop the \u201cmanipulation\u201d<\/em> that\u2019s seen amateur investors completely leave one of America\u2019s top hedge funds, Melvin Capital, teetering on the edge of bankruptcy.<\/p>\n

As trading opened, Friedman kept her word and the buying and selling of GameStop stock was halted<\/a> intermittently throughout the morning, in a bid to stave off the \u201cmanipulation\u201d<\/em> she warned about. But what was it about one failing video games retail company that sparked such panic on Wall Street?<\/p>\n


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\n Also on rt.com<\/span>
\n Surprise BOOM: GameStop stock spikes as Reddit-based effort to spite short-sellers triumphs<\/span>
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A fixture in American shopping malls, GameStop once held launch-night parties for the biggest annual releases, but has seen its business fall off a cliff in recent years due to digital purchasing and the decline of malls nationwide. Enter the short-sellers. Put simply, hedge funds looking to capitalize on a failing business can borrow shares in a company, immediately sell them, and ideally, buy them back later at a lower price to pay back the original lender while pocketing the difference. Should the price rise instead of fall, however, these funds have to pay back the shares at the new, higher price.<\/p>\n

Profiting off a failing business may seem either a canny move or the epitome of vulture capitalism, but it\u2019s a common practice. Wall Street\u2019s top investing firms even help each other identify stocks ripe for the picking, as Citron Research did when it deemed GameStop a \u201cfailing mall-based retailer\u201d<\/em> in \u201cterminal decline.\u201d<\/em> Citron Research and Melvin Capital both bought tens of millions of dollars worth of short positions in GameStop, but soon learned the hard way that in short selling, there\u2019s no end to the amount of money one can lose.<\/p>\n

The big squeeze<\/h3>\n<\/p>\n

The two million members of Reddit\u2019s \u2018WallStreetBets\u2019 community took an interest in GameStop back in August when they noticed the arrival of pet supply e-tailer Chewy\u2019s co-founder Ryan Cohen to its board, signaling there was some life in the company yet. When they noticed that Melvin Capital and Citron had bought the stock short, they decided to start buying, pumping up its value, partly to make a buck and partly to punish the hedge funds for profiting off the death spiral of a store ingrained in their childhood memories.<\/p>\n

Throughout January, GameStop\u2019s value shot up from $18 per share to $334 on Wednesday. As hedge fund managers whined and raged on television and Twitter, the WallStreetBets community dug their heels in and continued to buy.\u00a0<\/p>\n

Both funds took a beating, with rumors of Melvin Capital\u2019s bankruptcy circulating on Tuesday. Melvin manager Gabe Plotkin told CNBC<\/a> that these rumors were false, but the fund still needed a bailout of nearly $3 billion to cover its losses, before it closed its position that afternoon.<\/p>\n

Citron\u2019s Andrew Left said on Wednesday that he had managed to close his position at \u201ca loss of 100 percent.\u201d\u00a0<\/em><\/p>\n

With short sellers down $6 billion<\/a> as of Tuesday, the self-described \u201cdegenerates\u201d<\/em> of WallStreetBets posted screenshots of their ballooning bank balances, reveling in their newfound wealth as Wall Street suffered. One poster reportedly turned $55,000 into $13 million, while another posted a screenshot of his $64,000 gain, announcing<\/a>\u201cI can now write my mom a check and put my sister through lymes treatment. This has been a very rough year, but I\u2019m so thankful for every single one of you.\u201d<\/em><\/p>\n

\u201cLife changing money is turning into destiny changing money,\u201d<\/em> another wrote<\/a> on Tuesday night.<\/p>\n

An awakening<\/h3>\n

The titans of Wall Street seethed. Investor Michael Burry, who made a fortune on the 2008 subprime mortgage crisis, said in a now-deleted tweet on Tuesday that trading in GameStop is \u201cunnatural, insane, and dangerous\u201d<\/em> and there should be \u201clegal and regulatory repercussions.\u201d\u00a0<\/em><\/p>\n

Despite Burry\u2019s call for punishment and Friedman\u2019s fretting over \u201cmanipulation,\u201d<\/em> the amateur investors of WallStreetBets aren\u2019t actually breaking the law. Their forum posts are considered free speech under the First Amendment, rather than illegal attempts to dupe investors.\u00a0<\/p>\n

\u201cThere\u2019s been an awakening,\u201d<\/em> financial adviser Tim Collins wrote<\/a> last week. \u201cA large group of retail traders have realized if they work together…they can overpower any institution or short seller in the world, outside of the Fed, of course.\u201d<\/em> One Reddit poster put it<\/a> more bluntly:<\/p>\n

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What I think is happening is that you guys are making such an impact that these fat cats are worried that they have to get up and put in work to earn a living.<\/strong><\/em><\/p>\n<\/blockquote>\n

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People finally realized pitchforks weren’t working and used dollars to fuck over Wall Street elites<\/p>\n

\u2014 Tim Pool (@Timcast) January 27, 2021<\/a><\/p><\/blockquote>\n

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Redditors have done more to hurt Wall Street in 2 weeks than Occupy Wall Street, the Democratic Socialists of America, and the Bernie Sanders Presidential Campaigns were able to do in a decade.<\/p>\n

\u2014 Saurabh Sharma (@ssharmaUS) January 27, 2021<\/a><\/p><\/blockquote>\n

Amid the celeration, some WallStreetBets users predicted an impending regulatory crackdown, especially given the astronomical donations Wall Street gave to Joe Biden and the Democratic Party in the runup to last year\u2019s election.<\/p>\n

\u201cThe speed in which Congress will probably pass legislation to prevent something like this GameStop thing from happening again will show you the difference between \u2018immediate\u2019 for Wall St and \u2018immediate\u2019 for people waiting on those $2k checks,\u201d<\/em> NFL running back and outspoken leftist Justin Jackson tweeted on Wednesday.<\/p>\n

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The speed in which Congress will probably pass legislation to prevent something like this GameStop thing from happening again will show you the difference between \u201cimmediate\u201d for Wall St and \u201cimmediate\u201d for people waiting on those $2k checks<\/p>\n

\u2014 Justin Jackson (@J_ManPrime21) January 27, 2021<\/a><\/p><\/blockquote>\n

Like this story? Share it with a friend!<\/em><\/strong><\/p><\/p>\n

Article source: https:\/\/www.rt.com\/usa\/513819-gamestop-stock-trading-wall-street\/?utm_source=rss&utm_medium=rss&utm_campaign=RSS<\/a>\r\n<\/p>","protected":false},"excerpt":{"rendered":"

\u201cWe are actively monitoring social media chatter and will halt stock if we match chatter with unusual activity in stocks,\u201d NASDAQ CEO Adena Friedman announced on Wednesday morning. Speaking to CNBC, Friedman demanded regulators intervene to stop the \u201cmanipulation\u201d that\u2019s seen amateur investors completely leave one of America\u2019s top hedge funds, Melvin Capital, teetering on […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[75],"tags":[13],"class_list":["post-251828","post","type-post","status-publish","format-standard","hentry","category-breaking-news","tag-breaking-news"],"_links":{"self":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/posts\/251828","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/comments?post=251828"}],"version-history":[{"count":0,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/posts\/251828\/revisions"}],"wp:attachment":[{"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/media?parent=251828"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/categories?post=251828"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usa.timesofnews.com\/breaking-news\/wp-json\/wp\/v2\/tags?post=251828"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}