Volatility has hit GameStop’s stock again.
The stock closed about 18.5% higher on Thursday after a raw session where trading was halted several times due to the sharp moves. GameStop rose more than 100% on Wednesday after the company announced that its chief financial officer would step down.
Jim Cramer, the host of CNBC’s “Mad Money,” said there may be only one way to justify GameStop’s stock price:
“One of the things … we saw Square do – it seemed ridiculous at first, but it was okay; PayPal, same thing – is you become a crypto dealer. Now, last night on the incredibly good Nvidia call, as a side note, they were talking about March. [They’re] i have some real cards just for crypto. It really won’t be important to Nvidia, but it could be important for a place like GameStop. If GameStop turned itself into an introduction to 5,000-store crypto stores, get them to sell $ 1 billion worth of stock … and buy crypto with it, then turn it into an international gambling place where you win bitcoin, I think you can justify the stock price. I haven’t been able to come up with anything else, but this works. And it doesn’t have to be bitcoin. We can make it crypto. But turn it into a crypto information palace and you have global games, no latency, you play it and suddenly [GameStop investor and Chewy co-founder] Ryan Cohen – then you might start to believe him. Well, the CFOs usually don’t have bitcoin on their balance sheet. Perhaps [resigning GameStop CFO] Jim Bell, he didn’t want that. Ryan Cohen is a great thinker. I feel like this is the way to get this stock higher. I can’t come any other way. “
Alma Angotti, a former Securities and Exchange Commission enforcement attorney, expected more interest from regulators:
“It’s important to remember that the securities regime is a disclosure regime and people can make speculative bets on stocks and people can lose a lot of money. And maybe in the minds of certain people, that ice tweet was related to the CFO’s resigning tweet and they think the company will be fixed and successfully brought into the digital world. It’s hard to tell. But … I think both Congress and the SEC will study that balance between orderly markets and let people invest what they want to invest for whatever reason they want to invest, even if it doesn’t make sense to us. “
Jon Najarian, the co-founder of MarketRebellion.com and a CNBC contributor, tracked spiking options activity in three Reddit-fueled names:
“This is steroid volatility. And at the end of last week, that’s the normal February expiration date. Three stocks really caught our eye, both because of the increase in Reddit posts and [a] increase in buying options, and those were GameStop, AMC and Blackberry. So when we saw that, it got built in late last week … and then it faded away, and that’s probably because GameStop bounced a bit on Monday, and on Tuesday it dropped to about 55,000 contracts on the call side. That is quite low. [On Wednesday], it pops up to 270,000 calls. In other words, a fivefold jump in volume [Wednesday]Similar jumps in AMC surpassed more than a million calling contracts from a low of about 155,000 last Friday and Blackberry beyond that. And all three saw excessive movements. Especially in the case of GameStop … it was just great. [On Thursday], they bought $ 200 calls and they traded as high as $ 46 for a $ 200 call to about $ 12 just before we got on the air. So there is a lot of fluff and a lot, I’m not trying to belittle them, but a lot of amateur trade chasing that high with only one trading day to go, because obviously these options expire tomorrow, the February ends at $ 200 tomorrow strike. Just crazy. But that’s what’s happening. You get a big herd in there – if they catch it right they can make a lot of money, and if they don’t move quickly they have less and less time to get out. “
Michael Darda, chief economist and market strategist at MKM Partners, preached caution:
“I think we’re all a bit confused. When I talk to family members and friends, I get a lot of questions about the stocks that are central to these Reddit forums and also about cryptocurrencies. So everything I tell retail investors his friends and family is just cautious. Speculate if you want to speculate, but it should be a super small part of your portfolio and don’t expect this to be a one-way game. So caution is definitely needed here. “
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