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Home > Trading > GameStop, other Reddit-favored stocks plunge as trading frenzy fizzles

GameStop, other Reddit-favored stocks plunge as trading frenzy fizzles

Published by linker 5

Posted on February 3, 2021

6 min read

Last updated: January 21, 2026

FILE PHOTO: Bars of silver are placed on wooden pallets at the KGHM copper and precious metals smelter processing plant in Glogow

By Sagarika Jaisinghani, Thyagaraju Adinarayan and Lewis Krauskopf

(Reuters) – GameStop Corp shares more than halved in value on Tuesday and silver prices retreated as the Reddit-driven trading frenzy that roiled stock and commodity markets appeared to fizzle, at least for now.

The videogame retailer’s shares, whose wild gyrations have made or lost billions of dollars for hedge funds and other investors in recent weeks, closed down 60% at $90. They are now worth less than a fifth of their high of $483 last week.

Posters on the popular Reddit forum WallStreetBets, which was instrumental in fueling the rally, bemoaned the fall. “Our darkest hour,” read one post https://www.reddit.com/r/wallstreetbets/comments/lb1jk5/our_darkest_hour by user name kigfik who said they were still holding the stock. Another user, Cinther, posted that they bought at $390 and “lost so much that I don’t even care anymore” but were still holding.

“The rally is likely over (since) the short positions are pretty well taken care of,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

“That’s the game you play when you do this thing. It can work for a while until it stops working and when it stops working, it reverses pretty quickly.”

Short sellers saw paper gains of $3.39 billion during Tuesday’s session, according to S3 Partners. Year-to-date realized and unrealized losses for shorts recently stood at $9.2 billion.

“We have had a lot of shorts take their losses and walk away from the trade,” said Ihor Dusaniwsky, S3’s managing director of predictive analytics.

Spot silver prices, which became an alternative focus in the battle between small traders and Wall Street hedge funds last week, fell more than 8% after hitting an eight-year high on Monday. The main silver ETF was down 8.3%.

The retail frenzy in silver has left some dealers scrambling for bars and coins to meet demand.

Analysts said the silver pullback may show the limits of small investors’ impact in a large and complicated market.

Online broker Robinhood, on whose platform much of the buying and selling has taken place, raised trading limits on GameStop Corp, AMC and other stocks, according to an update on its website on Tuesday.

‘BIZARRE SITUATIONS’

Analysts predicted that the market frenzy, which has drawn the attention of regulators and politicians, was likely to fade, and said it was just a question of how soon.

“This is a pretty narrow strategy that likely creates some bizarre situations like GameStop and AMC but it’s not broad enough to change how institutional investors are going to invest,” said Rick Meckler, a partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“The strength of the move was so severe that it really opened up people’s eyes to the power of social media in the investment world. But having seen it and how short-term the nature of it is, I think it’ll lose its surprise.”

Broader markets appeared to be moving on. The Dow Jones Industrial Average rose 1.57%, the S&P 500 gained 1.39% and the Nasdaq Composite added 1.56%.[MKTS/GLOB] [.N]

Other so-called meme stocks caught up in the Reddit rally also sold off. AMC Entertainment Holdings Inc and Koss Corp each dropped by more than 40%, Express Inc and Naked Brand Group Ltd lost about a third of their value, while BlackBerry Ltd and Bed Bath & Beyond Inc showed double-digit percentage losses. Nokia’s U.S.-listed shares fell 7%.

With hedge funds at the center of the market drama, the GameStop saga is likely to expedite a regulatory review of the ever-larger role played by non-bank firms in the financial markets, regulatory experts said.

Melvin Capital, one of the biggest funds betting on a drop in GameStop’s share price, lost 53% in January. Other funds like billionaire investor Steven Cohen’s Point72 Asset Management lost nearly 9%, investors in the funds said.

Point72 has opened to new cash and raised more than $1.5 billion in commitments, Bloomberg News reported on Tuesday, citing people familiar with the matter.

Meanwhile, Robinhood’s app recorded more downloads than any other U.S. trading app last week, despite concerns its restrictions on transactions would alienate some users, according to market research data providers.

Robinhood, which raised $3.4 billion in emergency funds in the past week, plans an initial public offering later this year.

Chief Executive Officer Vlad Tenev said in a blog post that it was time to consider real-time settlement in U.S. equities trading, which currently follows a two-day settlement system.

“There is no reason why the greatest financial system the world has ever seen cannot settle trades in real time. Doing so would greatly mitigate the risk that such processing poses,” said Tenev.

CME RAISED SILVER MARGINS

One big drag on silver prices was a Chicago Mercantile Exchange margin hike on contracts for the metal, which makes speculative trade more expensive.

Mining stocks including First Majestic Silver and Pan American Silver fell.

Posts on Tuesday on WallStreetBets ranged from those giving up on the GameStop trade to calls to stick with the stock.

“Redditors are focused on meme stocks and that fight should continue – right now they think that silver is a distraction to their cause,” said Ephraim Rinsky, a novelist who was one of the first Redditors to post about buying silver on WallStreetBets.

The forum was in a sober mood on Tuesday.

“Guys. This only works (if) we work together. Buy the dip and hold. For all of us. The movement isn’t over,” said one post from “mwybert” that garnered more than 8,000 comments, most of them supportive.

GameStop, AMC, Koss, BlackBerry and Bed Bath & Beyond have not responded to requests seeking comment.

(Reporting by Thyagaraju Adinarayan in London and Sumita Layek, Swati Verma, Medha Singh, Susan Mathew, Noor Zainab Hussain, Arpan Daniel Varghese and Shariq Khan in Bangalore,; Additional reporting by Eva Mathews, Aishwarya Venugopal and Lewis Krauskopf, Svea Herbst-Bayliss in Boston, Pete Schroder and Chris Prentice in Washington, Megan Davies in New York; Writing by Tom Westbrook, Sagarika Jaisinghani, Nick Zieminski and Sonya Hepinstall; Editing by Ira Iosebashvili, Dan Grebler and Matthew Lewis)