GameStop.
The name of the American parent company of Micromania stores has been shaking up the financial world since the start of the year.
Reason: the price of the video game distributor explodes on the New York Stock Exchange, with an increase of more than 1,630%.
A look back at an extraordinary phenomenon, which resulted from an astonishing stock market brawl.
How Internet users made GameStop climb?
A historic brand for video game enthusiasts, the GameStop channel is far from offering a radiant model of growth in an era when online shopping, downloads or remote gaming have taken precedence over physical sales.
Its Micromania brand has suffered greatly in recent years.
Because of these financial difficulties, the title of the group is one of the most targeted on Wall Street by selling "short".
This practice, common for large investment funds, consists of borrowing and then selling shares in anticipation of a fall in their prices in order to buy them back cheaper at a later date and to earn a substantial profit.
A group of stock marketers, eager for risky financial bets, took it into their heads to prove these big names in finance wrong by massively buying the title of GameStop to inflate the price.
For that, they got together.
Main tool of this unprecedented movement, with its some 3 million subscribers: the WallStreetBets forum on the Reddit site, where Internet users brag about their exploits or their stock market woes with a lot of memes and saucy humor.
Result: last Friday, the action of GameStop (GME at the New York Stock Exchange) took off by more than 50% and has made an overall jump of 1,630% since the beginning of the year
What is a "short squeeze"?
This flight was only the beginning of a crazy epic.
Faced with this sudden rise, funds that had bet down on GME were forced to buy back the title to limit their losses, causing a "short squeeze" - a "forced liquidation" - which further increased the price. of action.
GameStop thus gained 18% Monday, then d93% Tuesday, before exploding of 140% Wednesday.
The troublemakers of WallStreetBets exulted in the face of this tour de force, seen as a middle finger to the big all-powerful investment funds in the new economy.
Some American media even spoke of a rebellion against the system.
For Jaime Rogozinski, who created the forum in 2012 but has since moved away from it, punters “have succeeded in doing what the Occupy Wall Street movement never did, but in a radically different way.
"" Occupy Wall Street was protesting that the little people cannot participate in the stock market game.
Now the little people have found a way to bypass the system from within, ”he quipped.
Can the stock market policeman intervene?
GameStop's jump, however, raises questions about a possible intervention by the regulator of the American Stock Exchange, the SEC.
For lawyer Jacob Frenkel, former prosecutor for the SEC, the extreme volatility of the title, whose listing has had to be suspended multiple times in recent days, would justify an action by the stock market policeman.
"The exchanges would be put on hold for 10 days to ensure that all investors have access to accurate and up-to-date information," explains this financial specialist, doubting however that such a measure will be taken.
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The SEC can also launch an investigation for manipulation of the stock price, but the commission almost never communicates before a case is opened.
Investor Andrew Left of Citron Research, for his part, said he was the victim of harassment last week after having counted on the fall of GameStop and indicated that he wanted to take legal action against these threats.
Will the soap opera continue?
The GameStop soap opera is far from over.
On Tuesday evening, whimsical Tesla boss Elon Musk, who has often attacked the "system" himself, tweeted a link to WallStreetBets, contributing to Wednesday's rise.
Gamestonk !!
https://t.co/RZtkDzAewJ
- Elon Musk (@elonmusk) January 26, 2021
For his part, the financier and venture capitalist Chamath Palihapitiya revealed that he had bought 50,000 shares in the group.
Several funds have confirmed to American media to have bought back their GameStop titles sold at "loss" to limit breakage.
The valuation of the company, which fell below $ 200 million in early March, exceeded $ 10 billion this Wednesday!
The war between individuals and "short-sellers" is far from over.
On “WallStreetBets”, the “revolutionaries” are now exchanging lists of the companies most sold by “hedge funds”.
This “virtuous” model has, it seems, given ideas to these Robins des Bois de la Bourse.
Reddit users have already turned to another business at risk: the movie theater chain AMC, whose title soared more than 175% on Wednesday.