Your eyes do not deceive you, today GameStop’s (GME) share price rose by over 130%, as an army of Reddit retail traders continued to speculate against a large short position in the retailer.
The short squeeze continued after the heavily shorted stock was endorsed by the Reddit page WallStreetBets, which then prompted the likes of Elon Musk and Chamath Palihapitiya to also comment on the stock.
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Chamath, who is the CEO of Social Capital bought $125,000 worth of Call options only yesterday, today stated that , “I ended up closing out my position this morning, and I wanted to announce that I’m taking all the profits that I made plus my original position — I’m going to take $500,000 and I’m going to donate it”.
The remarkable run comes despite the company announcing mass closures last April due to the pandemic, with many wall street firms labelling the stock a “sell”, with shares being priced at $3.25 at the time. As the battle between short and long traders continues, the company’s valuation is well beyond any fundamental metrics. As of writing, GME shares are trading at $318.73 up 115% from yesterday’s close of $147.98 after hitting an intra-day high of $380.
UPDATE: After reaching a high of $468.89 USD at 10:05 A.M EST, GME is currently down 43%. Many internet users are claiming that their trading platforms are prohibiting them from buying GME stock.
Other stocks, such as NOK, BB, and AMC, that made headlines by being swept into ‘WallStreetBets’ frenzy are currently down as well after spiking this week.
U.S. indices fall ahead of FOMC meeting
The S&P 500 and NASDAQ fell from yesterday’s all-time highs as markets awaited the first FOMC meeting of the year.
As expected, Wednesday’s meeting saw the Fed continue to keep rates unchanged, whilst maintaining its stance on support for the U.S. economy.
This comes as the coronavirus pandemic continues to impact growth and employment in the United States, with cases of the virus still running out of control.
Markets fell despite U.S. durable goods orders rising in December, by 0.9%. As of writing the NASDAQ and S&P 500 were down 2.05% and 1.93% respectively with the Dow down by 1.80%.
Earnings Season: Microsoft sets the stage for big tech
The last two weeks has seen banking giants release their Q4 earnings, with some such as Goldman Sachs outperforming expectations, now markets look towards big tech for similar results.
Starting with Microsoft, the tech giant today reported that it had surpassed $40 billion in sales and $15 billion in profit in a quarter for the first time, resulting in its shares hitting a new high.
The company announced earnings of $15.46 billion, or $2.03 a share, on sales of $43.1 billion, which was mainly helped by an increase in work-from-home activity.
Next up to report are Apple, Facebook and Tesla.
Quote of the day – “I know where I’m getting out before I get in.” – Bruce Kovner
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Senior Market Analyst