The assault is directed squarely at hedge funds and other Wall Street titans that had made bets the struggling video game retailer’s stock would fall. A couple have already essentially admitted defeat, and the army of smaller investors is pledging to keep up the momentum for GameStop’s stock in hopes of inflicting more pain.
The moves are reverberating across the stock market. Investors say the losses for the big professional investors who had been banking on a drop for GameStop’s stock are having to sell other stocks that they own to raise cash, which is helping to pull down the broader market.
Other forces were also weighing on the market. Johnson & Johnson fell 3.6% for one of the larger losses in the S&P 500 after it said its vaccine appears to protect against COVID-19, though not as powerfully as other rivals. Analysts said the results, which would require just one shot instead of the two required by other vaccine makers, were below expectations.
Most of Wall Street and other market watchers say they expect the novice and smaller-pocketed investors who are pushing up GameStop to eventually get burned. The struggling retailer is expected to still lose money in its next fiscal year, and many analysts say its stock should be closer to $15 than $330.
A day earlier, GameStop and several other downtrodden stocks that had been soaring suddenly halted their momentum after Robinhood and other trading platforms restricted trading. It caused an outcry by customers and even both Democrats and Republicans in Washington.
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