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GameStop Rout Erases $27 Billion

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GameStop Corp.’s rally came to a screeching halt this week as the shares had their biggest one-day loss on record, erasing more than $27 billion in market value from their high.

The stock, which has been the focus of Redditors looking to squeeze short-sellers, fell 60% on Tuesday, closing below $100 for the first time in a week. Several other Reddit favorites — including movie-theater chain AMC Entertainment Holdings Inc. and clothing retailer Express Inc. — also tumbled.

GameStop’s retreat has coincided with a sharp reduction in short interest after bearish investors appeared to cover their positions. That loosened a squeeze on the stock caused by day traders who used Reddit forums to tout and bid up out-of-favor stocks that also included American Airlines Group Inc. and BlackBerry Ltd.

“With GameStop, if you trade now you are presumably betting on what happens tomorrow or next week,” said Craig Birk, chief investment officer at Personal Capital. “There are online pleas to buy and hold, but this does not feel like a buy and hold situation.” (Read more from “GameStop Rout Erases $27 Billion” HERE)

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Report: Gamestop, Other Bets Cost Hedge Fund 53% in January Losses

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Melvin Capital, the hedge fund at the center of the GameStop stock frenzy, lost roughly 53% in January on GameStop and several other bets, according to The Wall Street Journal (WSJ).

The losses were the aftermath of a move by several retail traders who drove up shares the hedge fund bet against in a short squeeze that surprised many on Wall Street.

Melvin started 2021 with approximately $12.5 billion and now has more than $8 billion, WSJ reported. Melvin’s current figures include the $2.75 billion in emergency funds Citadel LLC, its partners and billionaire investor Steven Cohen’s Point72 Asset Management pumped into the hedge fund last Monday to help Melvin close out their position with an enormous loss.

The cash infusion constituted part of a deal where Point72 and Citadel get non-controlling revenue shares in Melvin for three years, according to the WSJ. (Read more from “Report: Gamestop, Other Bets Cost Hedge Fund 53% in January Losses” HERE)

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