It’s a little ironic that Clicks announced plans to close all its Musica stores in the same week that shares in GameStop, a similar old-format chain of video game shops in the US, have literally taken off. However, that’s little to do with demand for its products and more about a bunch of retail investors cornering short sellers of the stock.
First published in the Daily Maverick 168 weekly newspaper.
GameStop’s stratospheric ascent this month has been driven by WallStreetBets, a community of retail investors and traders with a chat room on social media platform Reddit.
The “crowd trading” community decided to take on large US investors who were betting that shares of a number of companies would go down. They targeted irrationally over-shorted, buying them in small numbers at increasingly high levels until, eventually, they squeezed the hedge funds out of the stocks as they cut losses that ran into billions of dollars.
GameStop wasn’t the only target, with other companies including Nokia, Blackberry and AMC Entertainment, among others, surging too. This week alone, GameStop climbed 400%, taking gains this year to more than 1,200%. AMC Entertainment quadrupled in value on Wednesday.
The stocks started coming back down to…