GameStop’s three largest shareholders earn over $2bn amid stock surge
Video game retailer at the centre of a frenzied duel between Wall Street and small investors
The Reddit forum WallStreetBets logo shown on a smartphone. WallStreetBets briefly turned itself off to new users Wednesday. Photograph: Bloomberg
The three largest shareholders in GameStop, the video game retailer at the centre of a frenzied duel between Wall Street and small investors, have made more than $2 billion (€1.65 billion) from the company’s astronomic recent share rise.
Stock in the company continued its vertiginous rise on Wednesday, hitting a fresh 52-week high of $354.83, making the 13 per cent stake held by Ryan Cohen, 34, GameStop’s largest single shareholder, worth more than $1.3 billion. The stock rose again on Thursday.
Over the past two weeks, according to CNBC, Mr Cohen’s net worth increased an average of $90 million a day, or nearly $4 million per hour, as GameStop stock has surged more than 1,550 per cent this year alone.
Other winners include Donald Foss, the 76-year-old founder and former chief executive of Credit Acceptance Corp, a subprime auto lender. Mr Foss bought 5 per cent of GameStop early last year for around $12 million. His stake is now worth more than $500 million.
GameStop chief executive George Sherman has seen his 3.4 per cent stake jump to a value of about $350 million.
On Reddit, where many of the small investors have strategised over their investments, small investors too have boasted of their gains from beating Wall Street.
But some in Wall Street are also making huge gains. BlackRock, the world’s largest asset manager, owned 9.2 million shares in GameStop at the end of December, according to a regulatory filing. If it still holds all those shares, they were worth more than $3 billion on Wednesday.
The gains comes as thousands of small investors have poured into the stock and forced Wall Street hedge funds, including Melvin Capital and Citron, which were betting on GameStop’s collapse, to take billions in losses.
The trading frenzy over GameStop drew comment from the Biden administration on Wednesday with the treasury and other regulators announcing they were monitoring the situation.
Mr Cohen was a catalyst in the company’s phenomenal share price rise. Last year the investor and founder of Chewy, an online retailer of pet products, bought a stake in GameStop and launched a campaign for the company to move faster into the digital age to compete with Amazon.
In January Mr Cohen and two allies joined GameStop’s board. Despite the record rise in the company’s share price it is still planning to close up to 450 stores this year.
On Wednesday evening, the Reddit message board that drove the GameStop stock surges was briefly made private. The page also said it had experienced an “unprecedented” scale of interest and was facing technical difficulties.
Separately, the online gaming platform Discord said it had removed the WallStreetBets server from its platform for violating its guidelines on hate speech and spreading misinformation. Discord said it had issued multiple warnings to the server admin before banning it. – Guardian service