After a successful short squeeze, GameStop stock turned average Joes into millionaires and made others compare them to gambling.
GameStop Stocks skyrocketed earlier this week, but not because business is doing well. The stocks have been artificially inflated by Reddit as part of a short squeeze program, which has led many to wonder how easily the market can be captured if done right.
The subreddit / r / WallStreetBets took the opportunity to convert a share worth $ 20 into a share worth over $ 300, and many called it a once in a lifetime opportunity. After the intense and sudden boom in GameStop, many were looking for an alternative that would hopefully bring them similar results. Many turned to AMC, which went from low single-digit stocks to nearly $ 15 per share in 24 hours. However, there is no real plan to hold these stocks. It is a short term investment that will generate a lot of profit after the sale. It has gained so much traction that it has now caught the attention of the Biden administration. It has been found that this is not actually trading or investing, but pure gambling.
DailyFX analyst Peter Hanks compared the program to gambling in sports and commented on it as part of a larger statement. "The behavior of GME stocks has turned the point of traditional 'investment analysis' into a full blown mania, so investing in GameStop at this stage is more like gambling in sports than an educated bet on finances or revenue expectations of the company. " said Hanks.
Elon Musk helped pump up the GameStop inventory, which has resulted in even more people throwing money into chaos. Hanks noted that whether Wall Street likes it or not, history is being made. "The rise of GameStop is nothing short of remarkable and the event will no doubt make it into finance textbooks in the future. However, the longevity of this move is much more difficult to pinpoint as the stock has completely broken away from all basic valuation methods and is stepping under a brief press."
The movie Uncut Gems has been popping up on social media a lot in the past few days, with comparisons drawn between new investors and Adam Sandler's Howie. Whether this will end as badly for investors as it does for the fictional sports gamer remains to be seen. GameStop stock is expected to rise a little longer, but once it hits its peak it will fall dramatically and return to its normal share value. The GameStop The stock also went into a minor free fall after the market closed and Discord banned the official server for / r / WallStreetBets. Stocks eventually rose again, but it panicked many.
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