Elon Musk's 'Gamestonk!!' tweet and link to Reddit thread fuels 50 PER CENT surge in GameStop shares as amateur investors inflate struggling video game company's value to more than $10BILLION

 GameStop's shares skyrocketed for a fourth straight day Tuesday and is now worth $10billion - and was boosted again in after-hours trading by a tweet by Elon Musk

The struggling game retailer is now up more than 680 per cent this year, after amateur investors on Reddit group WallStreetBets began buying up stock.

The group is inflating the company's price in a battle against traditional hedge funds, who have taken out short positions on the assumption that GameStop's stock will go down.

The company jumped 93 per cent during Tuesday's roller coaster trading session.

According to MarketWatch, GameStop is now worth more than $10billion for the first time in its history due to the war between WallStreetBets investors and short sellers.

And the company surged 50 per cent in extended trade after Musk tweeted 'Gamestonk!!' 

'Stonks' is a tongue-in-cheek term for stocks widely used on social media.

Along with that tweet, he shared a link to Reddit's Wallstreetbets stock trading discussion group, where supporters affectionately refer to the Tesla CEO as 'Papa Musk'.

GameStop's shares skyrocketed for a fourth straight day, thanks in part to Elon Musk's Tuesday afternoon tweet

GameStop's shares skyrocketed for a fourth straight day, thanks in part to Elon Musk's Tuesday afternoon tweet

The company surged 50 per cent in extended trade after Musk tweeted 'Gamestonk!!' 'Stonks' is a tongue-in-cheek term for stocks widely used on social media

The company surged 50 per cent in extended trade after Musk tweeted 'Gamestonk!!' 'Stonks' is a tongue-in-cheek term for stocks widely used on social media

GameStop is up more than 680 per cent this year, a spike led by investors on the WallStreetBets subreddit. GameStop is now worth more than $10billion for the first time in its history due to the war between WallStreetBets investors and short sellers

GameStop is up more than 680 per cent this year, a spike led by investors on the WallStreetBets subreddit. GameStop is now worth more than $10billion for the first time in its history due to the war between WallStreetBets investors and short sellers 

Now, GameStop could be headed or $15billion thanks to Musk's tweet.

GameStop's stock has been propelled by traders on Wallstreetbets, many of them buying volatile call options.

The share spikes of the last few days are raising questions about potential regulatory clampdowns from the US Securities and Exchange Commission (SEC).

'Such volatile trading fueled by opinions where there appears to be little corporate activity to justify the price movement is exactly what SEC investigations are made of,' said Jacob Frenkel, Securities Enforcement Practice Chair for law firm Dickinson Wright and former SEC enforcement attorney. The SEC declined comment.

Herds of amateur investors on Reddit have long been supporters of Tesla and other hyper-volatile stocks, and their influence appears to be growing.

'I don't think this is a fad, it is a generational shift in how people think about investing their money,' said John Patrick Lee, ETF manager at VanEck.


'A retail trader will not lean on Wall Street to manage their money and I definitely now see an antagonistic relationship between the old guard (Wall Street) and individual traders who are on the rise,' he said.

As well as GameStop, Wallstreetbets have also backed BlackBerry, which advanced 4.9 per cent Tuesday and is up 185 per cent this year. 

Another tweet from Musk sent Etsy stock briefly soaring, after he revealed that he 'kinda loves' the e-commerce platform for handcrafted goods.

'I kinda love Etsy,' Musk tweeted early on Tuesday, adding: 'Bought a hand knit wool Marvin the Martian helm for my dog.'

Etsy shares soared as much as 9 per cent in pre-market trading following the tweet, before falling back to earth after the markets opened.

The surge in recent days - GameStop has increased more than seven-fold to $147.98 from $19 since January 12 - has spurred concerns over bubbles in stocks that hedge funds and other speculative players had bet would fall in value.

The surge in recent days - GameStop (file image) has increased more than seven-fold to $147.98 from $19 since January 12 - has spurred concerns over bubbles in stocks that hedge funds and other speculative players had bet would fall in value

The surge in recent days - GameStop (file image) has increased more than seven-fold to $147.98 from $19 since January 12 - has spurred concerns over bubbles in stocks that hedge funds and other speculative players had bet would fall in value

Trading in GameStop stock was halted for volatility nine times on Monday and five times on Tuesday.

To some stock market professionals, the recent moves look symbolic of a stock market that may be overvalued at the end of a year dominated by floods of fiscal and monetary stimulus to ease the coronavirus crisis.

The benchmark S&P 500 has gained more than 70 per cent from lows last March caused by the coronavirus pandemic.

'This is hardly an environment where informed investors are transacting to establish price discovery,' said Mike O'Rourke, chief market strategist at JonesTrading.

Venture capital investor Chamath Palihapitiya said in a tweet that he had bought $115 call options on GameStop on Tuesday morning after an exchange with Reddit founder Alexis Ohanian.

Short sellers in GameStop are down $5billion on a mark-to-market, net-of-financing basis in 2021, which included $876million of losses early Tuesday, according to analytics firm S3 Partners.

'GME shorts and longs are in a knockout battle being waged in the stock market as well as social media platforms,' wrote Ihor Dusaniwsky, S3's managing director of predictive analytics.

Another stock popular with Reddit investors, Virgin Galactic Holdings, surged 17 per cent, and is now up 77 per cent year to date.

Much of the recent action among Reddit traders has centered around shares that have been heavily 'shorted' by other market players - traditionally an area dominated by hedge funds.

Shares in Evotec rallied 8 per cent on Tuesday with three traders reporting that hedge fund Melvin Capital Management was closing its short positions after suffering losses on some bets.

Melvin previously held a 6.2 per cent short bet against Evotec, according to filings with the German regulator. The fund did not respond to requests for comment.

Short sellers typically bet against stocks of companies that they view as outdated in their business models or otherwise overvalued.

Noted short seller Andrew Left is as convinced as ever that GameStop is a dying business and its stock price will fall sharply. 

Left shorted the company's stock when it traded around $40 a share and forecast publicly that it would tumble to $20 a share. He said on Tuesday that he was still short the stock.

'Will it end badly? Sure. We just don't know when,' said Thomas Hayes, managing member at Great Hill Capital LLC in New York.

Elon Musk's 'Gamestonk!!' tweet and link to Reddit thread fuels 50 PER CENT surge in GameStop shares as amateur investors inflate struggling video game company's value to more than $10BILLION Elon Musk's 'Gamestonk!!' tweet and link to Reddit thread fuels 50 PER CENT surge in GameStop shares as amateur investors inflate struggling video game company's value to more than $10BILLION Reviewed by STATION GOSSIP on 04:55 Rating: 5

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