Secretary of the Commonwealth William Galvin is calling for a 30-day suspension of GameStop stock trading after investors from the social media platform Reddit catapulted the company’s share price this week.
Speaking to CNBC on Wednesday, Galvin called the trading, led by the group of amateur investors seeking to upend the efforts of wealthy investors, who are betting on the decline of the video game retailer’s stock price, “dangerous” to the investors, and to the market.
“I think we’ve all recognized the current pandemic has created a unique situation where many have gotten into day-trading and really have no idea exactly what they’re doing,” Galvin, the state’s top securities official, said on CNBC. “These types of entities, such as GameStop, have created a really difficult situation for these people.”
Based in Grapevine, Texas, GameStop has lost $1.6 billion over the last 12 quarters, and its stock fell for six consecutive years before rising in 2020. In light of the company’s poor stock performance, investment firms have been “shorting” the stock, meaning borrowing shares and selling them with the hope of buying them back at a cheaper price.
The company’s market value to increase to over $24 billion from $2 billion within days of the social media-based effort, according to the New York Times. Its shares have skyrocketed 1,700 percent since December. Between Tuesday and Wednesday, the market value rose over $10 billion.
Material from the Associated Press was included in this report.
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