Gamestop feverishly searches for strategies to deal with the price rally. (Photo: Shutterstock)
Gamestop investors who are not to be counted among the traders who are organized via the Reddit forum Wallstreetbets and armed with apps like Robinhood or Trade Republic have rushed to the stock to spoil shortsellers the fun of betting on falling prices are faced with a problem that seems incomprehensible at first glance.
Anyone who buys share certificates primarily bets on rising prices and wants to achieve returns either through a later sale at a higher price or through regular dividends in the event of positive business developments. If a share now rises massively in price, this is a course that is entirely in the interests of the investor who already has shares.
Gamestop’s paper billionaire: 76 million investment becomes 2.9 billion stake
Just that is what the holders of lower priced papers like last week those from Gamestop or AMC. As Business Insider (BI) reports, one of the Gamestop shareholders became a multi-billionaire on paper, although last summer he only invested 76 million US dollars in a 13 percent stake in Gamestop.
Just like other Gamestop insiders, Ryan Cohen, the paper billionaire of the stock rally, has not yet sold any of his shares, and apparently not before. According to BI, not a single one of the Gamestop Insiders sold shares after January 11, 2021.
Previously, insiders participated at weighted prices of between around 20 and less than 40 dollars on the market. Last Friday the paper closed at $ 325. Nevertheless, not even Gamestop boss George Sherman or major investor Donald Foss seized the opportunity according to BI information.
Fears of damage to reputation: Investors do themselves difficult with the sale
This may be due to the fact that there is a holding period before the publication of the next annual report on March 26, 2021. It seems more likely, however, that investors will be prevented from actively profiting from a price increase that is not based on any economic factors and thus presents itself as pure speculation.
For the communication professional Bob Pickard, the behavior is more than understandable. After all, it would look as if the insiders wanted to benefit from the ignorance of the new investors, so Pickard. That could backfire quickly and ruin the reputation of the profiteers.
Gamestop has not yet responded
In fact, Gamestop has not yet officially commented on the developments. The company seems to be in a state of shock. The ex-Gamestop advisor Dorothy Crenshaw describes the situation as a “crisis”. She assumes that Gamestop is feverishly working on a strategy to cushion the inevitable fall in the share price as much as possible.
At the latest with The announcement of the business figures on March 26, 2021 would make it clear to everyone that the price increase was substantially and completely unjustified. The company’s reactions are therefore under close scrutiny, said Crenshaw. It is clear, however, that Gamestop has become a plaything of a culture war between the WallstreetBets rebels and the big hedge funds.
AMC and Silver Lake seize the opportunity
Investors in other WallstreetBets stocks have also noticeably kept their feet still. Only at AMC did they take advantage of the opportunity presented and redeemed a loan of 600 million dollars for company shares.
AMC likes that, which is a bit get back financial freedom and that also pleases the lender Silver Lake, who could now exchange a weakly secured loan for real company shares and would benefit from the development of the paper if there were to be something to profit from.
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