New sensational boom today in pre-market for GameStop (GME) shares thanks to news regarding Roaring Kitty, and despite Robinhood’s limits.
On Friday, the stock had closed the week at a price slightly above $23, but today at the opening of the pre-market, it suddenly shot up to $47, only to reposition around $40.
The return of Roaring Kitty: boom of GameStop stocks today despite the limits imposed by Robinhood
It is very likely that what triggered this sudden boom was the “return” of Roaring Kitty.
Last night, in fact, he posted the following tweet on X:
pic.twitter.com/zUuccrKWZr
— Roaring Kitty (@TheRoaringKitty) June 3, 2024
The tweet does not seem to say anything specific, but it is linked to an initiative by the whale that has a call position set at $20.
He's back!
In $GME related news, there has been a whale slamming $GME $20 calls for June 21st 2024.
The chain has now over 144,000 in open interest!!!
The whale added often during the final hour of trading, causing net premiums to spike bullish.
Link: https://t.co/cdrrqbxNRe pic.twitter.com/7bGJvR9JLP
— unusual_whales (@unusual_whales) June 3, 2024
Il mercato azionario è spesso descritto come un’arena di “bull” e “bear”. I “bull” sono investitori ottimisti che credono che i prezzi delle azioni saliranno, mentre i “bear” sono investitori pessimisti che pensano che i prezzi scenderanno.
In fact, Roaring Kitty has also published a post on Reddit that made clear reference to that call.
The GameStop stock on the stock market had a first sensational boom in January 2021, in the middle of a bull run, when in just under three weeks it skyrocketed from $4.4 to over $120, marking the all-time high.
That boom was due to a real “guided” campaign of purchases on traditional financial markets to try to “defend” the stock from short sellers.
Therefore, it is not a coincidence that when news spreads about other large shorts, it is thought that the supporters of GameStop might reorganize to buy the stock in large quantities and increase its value, thus causing significant losses to the large short sellers.
The trend of GameStop stocks
After the impressive boom of January 2021, the price of GameStop shares has never returned above $100.
In fact, three weeks after the all-time high it had already plummeted below $10, although that was still a level far greater than the initial $4.4.
However, the stock seemed to have had the strength to recover, when the following month it rose above $80, but this second bubble also ended up bursting in a short time.
Throughout 2021, the price of the GME stock fluctuated above $35, but with the bear-market of 2022, it returned to $15.
Even in 2023, however, it continued to decline, reaching a first post-bubble low in November, below $12, and then returning to $10 in April 2024.
In other words, after rising from $4.4 at the end of 2020 to $10 in mid-January 2021, passing through a sensational speculative bubble organized by GameStop supporters, a second bubble inflated which, however, burst in 2022, after which the price ended up returning to the $10 of the burst of the first bubble.
Among other things, the previous historical maximum dated back to 2008, and it was about 15$, therefore in line with the quotations of 2023/2024 until April.
Shortly before mid-May, however, there was another mini-bubble, probably also linked to the resumption of Roaring Kitty’s activity, which had brought the price back to $80, still in pre-market, but then it burst, leaving the price to return to $18.
Last night, however, there was a new awakening thanks to the new posts by Roaring Kitty.
The limits of Robinhood: Roaring Kitty still pushes the price of GameStop shares
The GME stock is tradable also on Robinhood.
After the sudden boom in pre-market today, the company has introduced some limitations.
RobinHood has added a warning for anyone trying to buy GameStop pic.twitter.com/sTJtBoLLJj
— wallstreetbets (@wallstreetbets) June 3, 2024
Practically today it will prevent exchange orders at a price that deviates more than 20% from Friday’s closing price.
In theory, this restriction would serve to allow limited trading during the extended hours on the platform, but some users have reported being completely blocked from purchasing CFDs on GameStop shares.
Market manipulation
The GME stock on the market is clearly manipulated.
On one side there are the whales who are shorting it, and on the other side there are many small organized retail investors who are trying to defend it by attempting to liquidate (at a loss) the short positions.
This creates bubbles, because in order to trigger the short positions, many need to buy to drive the price up.
Companies like Robinhood have already had problems in the past with these manipulations, therefore now they are trying to pull out of it.
Whether it is real manipulations can be understood by observing the trend of the chart over the medium-long term. In fact, it is clearly noticeable how every now and then real bubbles form, too quickly to be organic, which then can only burst.
If these volleys hurt the whales that short the stock, they also hurt the retail investors who buy at a high price, hoping it will rise further, only to end up selling at a loss at a lower price when the bubble has burst.
Those who organize the pumps usually buy before others, when the bubble has not yet fully inflated, and maybe sell shortly after the peak with large profits.