GameStop Stock Plummets 60%... The Ants' Challenge Ends in Vain

Price Drops to $74 Intraday
Market Cap Loses 20 Trillion Won in 6 Days
Silver Price Also Falls 10%
Experts Warn of Further Decline

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] It was a "fleeting dream." The cheers that had triumphed over the hedge funds' short-selling assault turned into groans. The stock price of GameStop, which individual investors had been buying heavily, plunged 60%, falling sharply for two consecutive days. It is estimated that individual investors who joined the GameStop stock investment late suffered significant losses.

On the 2nd (local time), GameStop closed at $90 on the New York Stock Exchange, down 60%. During the session, it even dropped to $74. GameStop's stock price had fallen 30% the previous day. The decline over two days reached 72%. The difference between the intraday high of $480 recorded on the 28th of last month and the low on this day was about $400.

As of the 27th of last month, GameStop's market capitalization, which had reached $24.2 billion (approximately 26 trillion KRW), shrank to $6.2 billion (about 6.8 trillion KRW). In just six days, 20 trillion KRW of market cap vanished into thin air.

CNBC reported, "It seems that not only the hedge funds that engaged in short selling but also general investors sold GameStop shares, causing the stock price to fall."

Other stocks heavily bought by individual investors also plunged simultaneously. Theater chain AMC fell 41%, KOSS 42%, and Express 32%. As stock prices plummeted, individual investors' losses increased.

Famous day trader Dave Portnoy, who actively invested in GameStop and AMC, revealed on Reddit's investment community 'WallStreetBets' that he sold all the stocks mentioned there and suffered a loss of $700,000.

He blamed the stock trading application Robinhood, which restricted the purchase of GameStop shares, saying, "Robinhood killed the 'Reddit rally'." He claimed, "Robinhood and its CEO took money from me and should go to jail."

Amid investors' dissatisfaction, experts are warning of the possibility of further declines in GameStop's stock price. Mohit Baza, director at Wallercaves Capital, predicted, "The stock price could fall as much as it rose." The Wall Street Journal also reported that GameStop's market capitalization is still high compared to $1.3 billion at the beginning of the year.

‘Bond King’ Bill Gross evaluated that individual investors who tried to raise GameStop's stock price by buying call options without professional knowledge were "doomed to fail from the start," even without regulation.

Silver, which had emerged as a new investment target instead of GameStop, also reversed its upward trend to a sharp decline. On the New York Mercantile Exchange that day, March delivery silver futures closed at $26.402 per ounce, down 10.3% ($3.02). Silver prices had surged more than 9% the previous day, setting an eight-year high, but that was short-lived. The New York Mercantile Exchange's increase in silver trading margin requirements the day before was a factor that curbed the sharp rise in silver prices.

As GameStop's stock price plunged, the New York stock market quickly regained stability. On that day, the Dow Jones Industrial Average closed at 30,687.48, up 475.57 points (1.57%), the S&P 500 index rose 52.45 points (1.39%) to 3,826.31, and the Nasdaq index ended at 13,612.78, up 209.38 points (1.56%).

This content was produced with the assistance of AI translation services.