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Sunday, June 20, 2021
Trading

GameStop drops 20% after Reddit investor forum closes

GameStop

Reddit moderators closed the wallstreetbets forum to make adjustments after it was blocked on chat app Discord

The GameStop saga has taken an unexpected twist, with shares down 20% in after hours trade after an investor forum on Reddit closed temporarily.

The wallstreetbets public forum had fuelled massive gains in the US games retailer, along with a number of other companies.

But the shares fell sharply after the forum temporarily turned invitation-only.

The trading frenzy has spread globally and has led to a White House alert.

GameStop has been the main focus of attention of traders having seen its share price soar more than 300% in the past week. Experts say it is the result of a fight between private and professional investors.

After some frenetic trading activity, Reddit moderators closed the wallstreetbets forum to make adjustments after it was blocked on chat app Discord due to obscene content.

We blocked all bad words with a bot, which should be enough, but apparently if someone can say a bad word with weird unicode icelandic characters and someone can screenshot it you don’t get to hang out with your friends anymore, read a message from the group’s moderators after wallstreetbets reopened.

Discord said its decision to block the forum had nothing to do with its apparent impact on share prices.

Shares of Gamestop, AMC Entertainment, Koss Corp and BlackBerry all dropped at least 20% moments after the forum was closed, although the companies recovered some of their losses when the forum reopened about an hour later.

Even with the pause, GameStop shares were selling at $292, compared with less than $20 just a few weeks earlier.

The fall highlighted the role the forum has played in fuelling stock rallies of several hundred percent that experts say have been driven primarily by private investors.

The massive GameStop share surge appears to be less about the company – which is a loss-making bricks and mortar gaming retailer – and more about a fight between Wall Street fund managers and individual investors organising online.

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