Daily Stock Price (Today January 28): GameStop stock price skyrocketed more than double
Stocks like GameStop and AMC are soaring. Thank investors on Reddit for the surge
It has been a big week for GameStop shares.
The struggling video game retailer was trading above $330 a share Wednesday afternoon, more than double its close of $147 on Tuesday. At the start of 2021, shares of GameStop closed at $17.25 on Jan. 4. Since then, shares have surged more than 1,000% this year alone, compared with just a 1% rise in the S&P 500, the broader benchmark for most mutual funds, US News reported.
The primary reason for the surge? Smaller investors who have banded together in places like Reddit, under the subreddit r/WallStreetBets.
And it's not just GameStop. Shares of AMC Entertainment jumped more than 230% Wednesday as the Twitter trend #SaveAMC spread amid concerns the movie theater chain might file for bankruptcy due to the COVID-19 pandemic keeping moviegoers away.
Even BB Liquidating, the remains of former video rental giant BlockBuster, saw a spike in its price, reports Bloomberg.
So what is going on? Here's what you should know.
What is r/WallStreetBets?
According to a description on its subreddit, it's "like 4Chan found a Bloomberg terminal." It was created in 2012 and has 3 million followers discussing making money and trading stocks, options, futures and more.
After the news gained steam, moderators switched to an invite-only status Wednesday evening. "We are experiencing technical difficulties based on unprecedented scale as a result of the newfound interest in WSB," they said in a note on the site.
Interest in r/WallStreetBets has garnered so much attention that Bloomberg expects the Securities and Exchange Commission will have to look at issues such as these for market influence.
How did GameStop shares jump?
Investors have been short selling the stock – borrowing shares, immediately selling them, then buying them back at a lower price before returning the shares – because of the retailer's ongoing struggles as a brick-and-mortar chain competing with consumers increasingly shopping online.
As those investors bet on GameStop's price to sink, a group of traders on Reddit have joined together to drive the retailer's stock price higher. Posts and threads from the subreddit seem to suggest this as an opportunity to stick it to Wall Street.
One Reddit post describes the surge of these stocks as "a tug of war between tradition and the future."
"Hedge fund managers live in the past, and continue to look down upon the retail investors," reads an excerpt of the post on WallStreetBets. "They truly believe that we, the average retail investors, don't know anything about finances or the market (which may be true), and we're just gambling our money away."
The movement even got the attention of Tesla CEO Elon Musk, sharing the subreddit with a tweet simply saying "Gamestonk!" The billionaire has openly shared his disdain for short sellers over wanting to see shares in Tesla decline.
Reddit said Wednesday afternoon the site is currently down for some users.
How is Wall Street responding?
Trading apps such as Robinhood, TD Ameritrade, E*Trade and Charles Schwab all appear to be suffering from outages, according to Down Detector, a website that tracks issues with online services.
These apps have contributed to a rise in investing among individuals. As the Wall Street Journal reports, individual investors accounted for nearly 20% of shares traded in the stock market, according to Bloomberg Intelligence.
In a statement obtained by USA TODAY, TD Ameritrade said it is setting restrictions on trades involving GameStop and AMC.
"In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME, $AMC and other securities," said the company. "We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors."
Meanwhile, major investors Citron Research and Melvin Capital have both claimed they are pulling their bets on GameStop.
Tesla stock falls after company reports first profit miss in more than a year
|Tesla CEO Elon Musk speaks during the unveiling of the new Tesla Model Y in 2019. AFP VIA GETTY IMAGES|
Tesla expects a 50% annual growth for its deliveries in future years, and says it likely will ‘grow faster’ in 2021, said Marketwatch.
Tesla Inc. late Wednesday reported its sixth-straight quarter of profit and a sales beat, but missed Wall Street expectations and disappointed investors who hoped for a clear-cut sales goal for the year.
Tesla TSLA, -2.14% stock fell as much as 7% in after-hours trading.
The company earned $270 million, or 24 cents a share, in the fourth quarter, compared with earnings of $105 million, or 11 cents a share, in the year-ago quarter. Adjusted for one-time items, the Silicon Valley car maker earned 80 cents a share.
Revenue rose 46% to $10.74 billion from $7.38 billion a year ago, thanks in part to “substantial growth” in deliveries but offset by extra costs, the company said.
Analysts polled by FactSet expected Tesla to report adjusted earnings of $1.02 a share on sales of $10.47 billion.
With new vehicles, new factories and ramped-up production on the horizon, “2021 is going to be a great year for Tesla,” Chief Executive Elon Musk said in a conference call with analysts after the results. “So I’m super excited about the future, and we look forward to making it happen.”
He later said he expects to remain CEO for several more years.
Up until now, Tesla had topped analyst forecasts every quarterly reporting day since October 2019, when it earned a surprise third-quarter 2019 profit against Wall Street expectations of a loss. 2020 marked the first full year of profitability for the company.
Tesla’s miss “was driven by weaker-than-expected margins,” analyst Garrett Nelson with CFRA said. Investors also viewed the lack of a direct 2021 sales guidance as a negative, he said.
Musk “probably chose to be less specific given various uncertainties,” including those that are pandemic-related, CFRA’s Nelson said. Moreover, without a specific target for the year, Tesla gives itself more flexibility and set itself up for “underpromising so they can overdeliver.”
Tesla’s average selling price of its vehicles fell 11% year-on-year as its mix continued to shift to the cheaper Model 3 and Model Y from its luxury Model S and Model X vehicles, the company said in the letter to shareholders. Tesla executives reiterated in the call that the change will continue to be headwind.
The company said it remained on track to start vehicle production at its new factories in Germany and Texas this year, with in-house battery cells. It is also on track to start selling its commercial truck, the Semi, by the end of the year.
In the call, Musk said he expects to deliver the Cybertruck, Tesla’s pickup truck, by the end of this year “if we get lucky” and after some design fixes. Volume production, however, is slated for 2022, he said.
Tesla shares have gained nearly 700% in the past 12 months, compared with gains around 17% for the S&P 500 index SPX, -2.57%. Earlier this year, the stock went on its longest-ever winning run.
Why did Apple’s stock price fall despite a record $111 billion revenue quarter?
Over the past year, investors have driven up the value of Apple from around $1 trillion to nearly $2.4 trillion—the highest ever for a public company, according to Fortune.com.
Apple got there by reigniting iPhone sales growth, developing new subscription services, and adding some new hardware products like AirPods.
Now the question is what can Apple do for an encore.
On Wednesday, the company said its holiday quarter broke nearly every one of its financial records. Revenue of $111.4 billion, up 21% from last year and $8 billion more than analysts had expected, was a record. Profits of $28.8 billion, up 29%, was also a record, as was the sales total in every geographic region and in most product categories.
But with Apple’s stock price already up 80% over the past year, including a 24% rise just in the last three months, expectations have gotten even higher.
After posting all of the record results, Apple’s shares slumped more than 3% in afterhours trading to $137.67. Crazy gains at struggling companies like GameStop, AMC Entertainment, and Blackberry have grabbed headlines in recent days, but with Apple’s titanic stock market value, its 3% afterhours drop is equal to almost $80 billion.
That’s double the total value of all three recent high-flyers combined.
Part of the problem is that Apple’s next big move isn’t yet visible to outsiders. Reports suggest the company is working on electric cars and virtual reality gear, each of which could open another significant market for CEO Tim Cook and his team to conquer over the next decade.
But Cook didn't give anything away on Wednesday, despite a lot of prodding by analysts during a conference call.
“As you know we give some color on the growth rates of the current quarter but not beyond that,” Cook explained at one point. After running through the strengths of Apple’s current product line, the CEO added: “Then of course we’ve got new things that we’re not going to talk about that we think will contribute to the company as well just like other new things have contributed to the company in the past. We see lots of opportunity.”
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