GameStop Corp. shares closed lower Thursday for their third trading day this week as volatile trading of heavily shorted stocks comes under more federal scrutiny.
shares closed near session lows, shedding 42% to finish at $53.50 on volume of more than 60 million shares, having touched a record of $483 on Jan. 28. Shares of the videogame retailer are down 84% for the week to date, and are on track to snap a three-week winning streak that was topped by a record 400% gain last week.
Late Wednesday, Rep. Maxine Waters, the chairwoman of the House Financial Services Committee, told Cheddar TV that Robinhood Co-CEO Vladimir Tenev and Keith Gill, the investor who popularized the GameStop trade on Reddit, will testify later this month.
Also, Treasury Secretary Janet Yellen led a meeting of federal regulators Thursday to discuss financial market volatility in wake of the frenzy.
Waters, who said the hearing will be “educational,” said she also hopes a hedge-fund representative will attend. The Feb. 18 hearing is called “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide.”
Tenev and Gill have been the two individuals most associated with the rise and subsequent fall in the stock of GameStop. The bandanna-wearing Gill, who goes by the username “DeepF–ingValue” on Reddit and goes by “Roaring Kitty” on YouTube, has been building a position in GameStop since the summer of 2019. See this WSJ profile of Gill.
Meanwhile, over on the Reddit WallStreetBets thread, which kicked off the buy-and-hold-GameStop-at-all-costs trend, the most popular posts remained those exhorting the faithful to hold on to GameStop shares in the face of recent losses.
The rally in GameStop, which was fueled by a squeeze of hedge funds betting against the company, started to subside after Robinhood, as well as other brokerages, limited the ability for investors to buy stocks and options in the company. The brokerage has raised billions from its backers to meet increased margin requirements.
Several other heavily shorted stocks got swept up in the frenzy, most notably AMC Entertainment Holdings Inc.
Shares of AMC fell 21% to close at $7.09 Thursday. AMC’s stock price is down 47% so far on the week, and like GameStop, is on track to snap a multiweek string of gains having notched a record weekly gain of 278% last week.