Quotes: GameStop stock retreats as Reddit rally runs into trading restrictions

N Citron

28/01/2021 19:07

By Sagarika Jaisinghani and Shriya Ramakrishnan
    Jan 28 (Reuters) - GameStop  GME.N  shares sank on Thursday
as trading platforms including Robinhood and Interactive Brokers
restricted trading in the video game retailer along with AMC
Entertainment  AMC.N  and other stocks that soared this week in
a social media-driven trading frenzy that shook stock markets.
    GameStop, the video game chain whose 1,700% rally has been
at the heart of the slugfest in the past week, lost half its
value in early trading.  urn:newsml:reuters.com:*:nL1N2K22YX The stock had rallied
initially, then retreated, while American Airlines  AAL.O 
joined the growing list of stocks making stellar gains as
small-time traders and major Wall Street institutions broadened
their battle. 
    The retreat in GameStop and other highfliers had little
impact on Wall Street, where the S&P 500  .SPX  was up 2% in
afternoon trade. 
    
    COMMENTS
ERIC SCHIFFER, CHIEF EXECUTIVE OFFICER, PRIVATE EQUITY FIRM THE
PATRIARCH ORGANIZATION, BEVERLY HILLS, CALIFORNIA
    "Trading platforms are not going to want to stick their
necks out and be on the frontline of what they may see as a
reckless war, in part, against the elite and the system of Wall
Street that's being democratized by information and the social
media. They also don't want to get involved in a system that has
served them for a long time. You are going to see many take
conservation positions until the SEC or the Biden Administration
clarifies how they are looking."
    "What's sad in all of this, what's concerning to me is, why
are they not picking companies that have intrinsic fundamental
benefits to investors in all this? There are many undervalued
solid companies that would benefit investors versus an AMC,
despite having an injection of more than $900 million dollars,
which still has a very questionable future with COVID and these
further variants that may keep people away from theaters for
years."

JOHN MCCLAIN, PORTFOLIO MANAGER, DIAMOND HILL CAPITAL
MANAGEMENT, COLUMBUS, OHIO
    “GameStop is a side effect of the vaccinations given to the
market from policymakers. The headache is GameStop, the chills
are some of these things that are happening in the debt
markets.”  
    “This does have implications for the fixed income market, in
a variety of forms and fashions. One is that clearly if the
equity price goes parabolic - like we’ve seen from some of these
names - there’s a bigger market capitalization and the bonds are
in theory more covered, particularly with some of these
companies - like you saw AMC issue equity. If you can actually
issue equity, get cash, you are issuing equity at a ridiculous
valuation. This is like Tesla 3.0.” 
    “The asset management industry is experiencing something of
a crisis right now, where you are going to have to start
thinking about non-traditional metrics for evaluating a
business. Typically, I don’t think most bond managers are
interested in the short interest of an equity outside of a
handful of names. But now that’s something you might want to pay
attention to. Understanding that in our market if you’re short a
name through the cash or the CDS, you’re going to have to pay
attention to certain things in the equity market that we used to
pay less attention to.”  

DAN PIPITONE, CO-FOUNDER, TRADEZERO AMERICA, BROOKLYN, NEW YORK 
     "This is history in the making. When I have uncles and
relatives calling me about trading, it's gone beyond the realms
of normal investing.
    "A lot of the big houses have all kinds of issues especially
since they have restricted trading on some of these short
squeeze stocks. 
    "From the perspective of David and Goliath, a lot of our
customers have been actively trading on the short squeeze. 
    "Obviously someone is going to be left holding the bag. In
one respect it's been a positive, but the whole casino-ization
of the stock market is something that concerns me. Often there
are knee jerk regulatory actions that may have unintended
consequences. The attention is great but the way these stocks
have moved has caught the eye of the regulators. 
    "(The pandemic) ushered in a new wave of investors providing
some daily action that people need. 
    "The new retailer is a semi-sophisticated investor." 

ANDREW SLIMMON, SENIOR PORTFOLIO MANAGER, MORGAN STANLEY
INVESTMENT MANAGEMENT, CHICAGO
On how it's affecting the broader market: “Not at all, it’s a
sideshow. Because the financial wealth of the country, for right
or for wrong, is heavily weighted towards older people who don’t
speculate in these types of stocks, so I don’t think it can
bring down the stock market.” 


    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
EXPLAINER-Why regulators may scrutinize GameStop's Reddit-driven
retail stock surge     urn:newsml:reuters.com:*:nL4N2K246P
TIMELINE-GameStop's 1,600% surge in retail investor vs hedge
fund battle     urn:newsml:reuters.com:*:nL8N2K2494
BREAKINGVIEWS-Short squeezers could end up strangling themselves
    urn:newsml:reuters.com:*:nL8N2K22TV
The big short: GameStop effect puts global bets worth billions
at risk     urn:newsml:reuters.com:*:nL1N2K217R
GameStop surge leaves U.S.-based mutual funds and ETFs behind   
 urn:newsml:reuters.com:*:nL1N2K230Y
Europe's top shorted stocks soar on GameStop contagion   
 urn:newsml:reuters.com:*:nL8N2K22G4
U.S. state regulator says GameStop trading could be
'systemically wrong' - Barron's     urn:newsml:reuters.com:*:nL4N2K20QJ
Bearish GameStop options contracts fly off the shelf after stock
surge     urn:newsml:reuters.com:*:nL1N2K22YX
Hedge fund Melvin Capital has closed GameStop position
-spokesman     urn:newsml:reuters.com:*:nFWN2K20LX
BlackRock may have raked in $2.4 bln on GameStop's retail-driven
stock frenzy     urn:newsml:reuters.com:*:nL4N2K23QG
QUOTES-No let up in short squeeze, retail frenzy forces funds to
cover     urn:newsml:reuters.com:*:nL1N2K21PS
GRAPHIC: GameStock surge timeline    https://tmsnrt.rs/2KSQYX3
GRAPHIC: The short squeeze    https://tmsnrt.rs/3t1OlU8
EXPLAINER-How retail traders squeezed Wall Street for bets
against GameStop     urn:newsml:reuters.com:*:nL1N2K221Y
Retail trading frenzy, reflation trade drive smallcap stocks
higher    https://tmsnrt.rs/2Ylef7l
GRAPHIC-U.S. most shorted index soars as wider market cools    https://tmsnrt.rs/36mHWcx
GRAPHIC-Hedge funds scrambling to exit shorts, cut losses    https://tmsnrt.rs/2M3Ke9D
GRAPHIC-GameStop 'long the shorts' trade goes mainstream    
 urn:newsml:reuters.com:*:nL8N2K33OF
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Compiled by the U.S. Finance & Markets Breaking News team)
 ((alden.bentley@thomsonreuters.com; 646-281-6041))