Home » Stock Market Analysis Today – Stock market drama surrounding Gamestop’s rise goes off the charts
Stock Market Analysis Today – Stock market drama surrounding Gamestop’s rise goes off the charts
TUCSON (KVOA) – Social media has been dominated by news of Gamestop’s stock rise.
When the pandemic hit, GameStop closed 300 of its locations. On April 1, 2020, its stock price was $3.25. To end 2020, the price was under $20. On Wednesday, the name was trading as high as $380. Something seemed a little off and it was.
“The problem is that the number of shares that have been sold were greater than the total number of shares that exist,” said UArizona Finance Professor Dr. Chris Lamoureux.
Dr. Lamoureux said that is actually impossible.
“There are shares that are not part of the float that are owned by insiders for example and founders who can lend their shares for the purposes of allowing them to their short. Even though those shares are not a part of what we call the “public float.” But when we see short interest, the amount of short selling that has occurred that is still outstanding, getting anywhere above half of the total number of shares is a warning sign.”
So, the more shares bought at that lower price, the dollar signs went up.
“It can be considered a form of manipulation. In an attempt to drive the price of the stock away from its fundamental value for the purpose of harming a specific group of traders in this case, the shorts and benefiting the traders who were the short squeeze position,” said Dr. Lamoureux.
Gamestop’s price soared over the last few days. So, a lot of hedge funds and other institutional investors closed out their short positions to minimize the damage they were taking. Which has lawmakers like Massachusetts Senator Elizabeth Warren, fired up.
“All of a sudden the billionaires’ hedge fund operators are yelling because they are not the only ones who make money when the manipulation works.”
It is unknown if this exchange is illegal or not. An investigation is taking place. But experts told News 4 Tucson it is for sure manipulation.