Gamestop 60%, silver 9% drop
Rapid decline in trading volume, withered to invest
“Only the remaining ants have empty shells”
Photo = REUTERS
Will the ant rebellion end in’two weeks down the road’? The prices of stocks and commodities, both of which US individual investors have campaigned to raise prices, are falling. Experts believe that “the trend is now reversed.”
Gamestop, AMC, all plummeted
On the 2nd (local time) in the New York Stock Market, GameStop closed at $90, a 60% drop from the previous day. GameStop fell 31% from the day’s free market transaction. AMC Entertainment’s share price plummeted 41.2% from the previous day.
The price of silver, which was said to be’the second game stop’, has also dropped sharply. On the same day, in the commodity market of the New York Commodity Exchange (COMEX), the silver futures price for March delivery fell 8.97% compared to the previous day, trading at $26.78 per Troion (about 31.1 g). This is the price of last September.
Gamestop and AMC stocks rose in price from mid-last month, and silver and other shares from the end of last month, led by individual US investors. This is because Reddit, the US online community, which led the attacks on individual investors against short-selling hedge funds, pointed them out as targets to buy. Reddit’s stock investment strategy, Wall Street Betz’s’Short Selling War’, GameStop, which is the flagship stock, soared to $347.51 per share and AMC to $19.90 per share. The silver price hit $30.13 for the first time in eight years.
Photo = REUTERS
“Prices far from fundamentals, won’t last long”
However, this trend does not last long. This is because the price has risen independently of corporate and product fundamentals. It is also the reason that the angry slogan’Let’s damage the hedge fund’ was a big driver. Thanks to this, the initial concentration was great, but as the emotions faded over time, the buying trend also slowed down.
Mark Taylor, a Mirabo Securities trader, said, “It is inevitable that the momentum that has risen due to short-term pressure will come to an end.” I’ve got to have it,” he told Bloomberg.
There is also an atmosphere of less interest from ants and institutional investors. Gamestop’s trading volume plummeted this week. On the first day, the trading volume was about a third of the average of the previous five trading days. The short (sell) position also fell sharply. Some are due to the stock platform restricting trading, but major foreign media analyzes that the price of call (buy) options is expensive regardless of the value of the company, and that investment enthusiasm in Reddit and the like is largely affected.
Bloomberg reported, “Market observers now see it as a matter of time for the rally to disappear.” Julian Immanuel, BTIG’s stock and derivatives strategist, explained, “There is a saying in the market that’the way to fix high prices is high prices’.” This means that when the price of a product becomes too high, there are no more people who want to buy it, and the number of sellers increases and the price decreases. He told Marketwatch that “Gamestop, which has risen in price due to strong call option buying last week, will go the same way,” he told Marketwatch.
Some investors run into the commodity derivatives market… “It’s not a market where individuals win”
The fact that the’fire power’ of individual investors, which was initially concentrated in GameStop and AMC, has recently spread to the commodity derivatives market also shook the reddit ball rally. Some turned to silver. Experts point out that this was the wrong choice in the first place. It may be possible for a short period of time to raise the stock price of an individual stock that initially did not receive much attention on the New York Stock Exchange like GameStop, but it is very difficult to raise the price of major assets in the global commodity market.
There are no large short-term shorts in the silver market that could be targeted by individual investors. The market size is also huge. In the middle of this month, before the’Short Sale Daejeon’, GameStop’s market capitalization was around $1.4 billion, while the value of silver stored in the London futures market vault amounted to about $4.89 billion.
Unlike stocks, silver has hedge funds and major banks, as well as commodity traders and mining companies. In addition, manufacturing companies in the electronics, information and communication (IT) and energy sectors, which are end users in kind, are also making large-scale transactions. In such a market, the influence that individual buying forces can exert is not significant.
Wall Street’s’replacement of rules’ also had some influence on the plunge in silver prices. On the 2nd, CME Group, which manages commodity transactions operating COMEX, raised the margin of silver futures from $14,000 to $16,500 per contract. Futures margin is the amount of deposit required for commodity transactions.
Bloomberg News analyzed that “a measure to push out small market players such as individual investors.” CMC Market analyst David Madden explained that “the exchange has hit the brakes,” and that “the silver price has plummeted since then.”
Reporter Sun Han-gyeol [email protected]