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In the American stock market "The GameStop wave may get bigger" scare of

The challenge initiated by a group of small investors who unite through social networks against professional investors through the actions of the American video game provider GameStop has caused a new unrest in the markets.

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While competition between small and large investors in the US stock market for GameStop shares is awkward, analysts say this situation can be seen in other stocks and may pose a risk to some investment institutions.
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The challenge of a group of small investors who united through social networks against professional investors for the actions of some companies suddenly became the agenda of the markets. This challenge, which started with the shares of US video game provider GameStop, caused unusual volatility in some stocks, while raising concerns across all equity markets.
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The country’s authorities said they closely monitor volatility in the markets, while analysts warned that the conflict between small and large investors may represent a risk for other stocks.
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American video game provider GameStop announced that it plans to close nearly 450 stores while experiencing economic difficulties in 2020 due to the new type of corona virus (Covid-19) epidemic. The company, whose market value declined due to economic difficulties, became one of the stocks whose shares were mostly “short sale” at the end of last year.
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Melvin Capital, one of the mutual funds, tried to make money from GameStop shares, which were around $ 17 last year, through the “short position” method of decreasing price. The group of investors, who joined on the social media platform Reddit, realized this situation and began to buy shares in an organized manner. Taking a “short position”; It means borrowing from investors who own a share by paying a certain rental price and selling it on the stock market. Therefore, if the price of the relevant stock falls, the investor who takes a “short position” makes money, if the price rises, he loses.
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While amateur investors, organized through the forum called WallStreetBets, increased their price by buying shares of GameStop, the number of participants in the group increased day by day. American billionaire Elon Musk also heard “Gamestonk !!” on Twitter on January 26. The group expanded further by posting a link to the WallStreetBets forum. GameStop’s share price, which previously hovered around $ 17, rose to $ 400.
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Shares of GameStop, which Wall Street predicts the value of large investment firms will continue to decline, has gained more than 1,700 percent in the past 2 weeks on heavy buyouts from small investors, leading to losses from investment firms. investment. While Melvin Capital and Citron Research are among the investment companies that lost money from the GameStop raise, the mutual fund loss was more than $ 5 billion, according to data from financial analysis company S3. Melvin Capital had to close its position at GameStop on Tuesday after its big loss.
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Likewise, the shares of companies such as Bed, Bath and Beyond, the AMC cinema chain, the makers of Nokia and BlackBerry phones, which have experienced economic losses during the epidemic period, have also started to rise.
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Analysts warned that the conflict between small and large investors could also pose a risk to other stocks, adding that it could “create a headache” for markets more broadly, and that the wave could grow. Earlier this week, JP Morgan shared a list of 45 stocks sensitive to the “short position” method, including companies such as real estate Macerich and the Cheesecake Factory restaurant chain. In a note shared by analysts at JP Morgan, the GameStop incident was claimed to set a “dangerous precedent” for the markets. Analysts noted that the rise in GameStop and Bezer shares will not last long if they disengage from core indicators, but it may cause major problems in the markets.
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The rapid rise of GameStop and similar actions was also on the Biden administration’s agenda. The U.S. Securities and Exchange Commission (SEC) announced Wednesday that they are actively monitoring volatility in the markets, working with regulators to assess the situation of market participants and study their activities. White House spokeswoman Jen Psaki stated at a press conference on the same day that the economic administration, including US Treasury Secretary Janet Yellen, was following the situation. Regarding the GameStop incident, Psaki said: “It was a good reminder, the stock market is not the only measure of the health of our economy.” found the evaluation. US Federal Reserve Governor Jerome Powell declined to comment on the issue at a press conference Wednesday when asked about the GameStop incident.
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Robinhood and Interactive Brokers, one of the stock trading platforms, announced Thursday that they are restricting the purchase of shares in GameStop and other companies. In the Robinhood statement, which was established with the goal of “providing access to financial markets, not just the rich,” recalling that the platform’s mission is “to democratize finance,” it was stated that they constantly monitor the markets. and make changes when necessary. In the platform’s announcement, it was stated that, in light of recent fluctuations, transactions in stocks, including GameStop, American Airlines, AMC, BlackBerry, Bed, Bath and Beyond and Nokia, were limited. Although only the sale of these shares was allowed, their purchase was prohibited. Following the restriction, GameStop shares fell about 50 percent.
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While the restrictions of stock trading platforms such as Robinhood on trading these stocks met with a backlash, this caused Robinhood to be the focus of criticism and small investors to turn to other platforms such as Webull. Democratic Congresswoman Alexandria Ocasio-Cortez declared on her Twitter account that it is “unacceptable” for Robinhood to block GameStop transactions and similar actions. Cortez asked for more information on the decision to prevent retail investors from buying stocks, while mutual funds operate as they wish. Republican Senator Ted Cruz also backed Cortez in his reaction. Another Democratic MP Ilhan Omar, on Twitter, stated that Wall Street made billions of dollars after the worst recession since the Great Depression. used the expression. “The GameStop boom shows what can happen when the stock market is played as a gamble and the SEC can’t or won’t stop manipulating the market. If we want a healthy stock market, we need a police officer to do their job. “said Democrat. Senator Elizabeth Warren. found the evaluation.
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Following the reactions, Robinhood said in a statement Thursday night that they plan to allow limited purchases of stocks like GameStop starting today and will continue to monitor the situation. Robinhood Chief Executive Officer (CEO) Vlad Tenev argued late Thursday that the decision to stop certain speculative transactions benefited the company and its millions of users. Stating that they do not want to limit their clients as much as possible according to the terms and regulations, Tenev said: “It pains us to have to enforce these restrictions. We will do our best to allow these shares to be traded as soon as possible. “he used the expressions. Tenev emphasized that they decided to limit trading in the shares in question because Robinhood was required to “prudently manage risk and deposit requirements” as required by SEC regulation.

Source: www.ntv.com.tr

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