Blockbuster Stock Surges More Than 6,000% In Five Days Despite Them Being Bankrupt
Blockbuster is the latest subject of Reddit stock surges, with shares up more than 6,000% in five days despite being bankrupt for 11 years.
The stock market has become the plaything of the wallstreetbets subreddit forum, as small investors continue to escalate GameStop’s market worth. In this year alone, thanks to skyrocketing shares, the company has been boosted by 1,550%.
Elsewhere, a relic of our entertainment past is being somewhat resurrected through an incredible stock surge – despite only having one store left in the world, Blockbuster is seeing big gains in the market.
BB Liquidating Inc., said to be ‘the final remnant’ of the former video rental giant, enjoyed a 774% spike on Tuesday alone. According to Bloomberg, this is 70 times the three-month trading average for the company these days. On Wednesday, January 27, there was a further 302% surge.
However, if you look back to Friday, January 22, you can see the full extent of the leap. On that date, shares were worth $0.0033. On Tuesday at the firm’s peak, shares were worth $0.20. That’s an increase of 6,060% in just five days.
That said, the value of these shares is always miniscule, known as ‘penny stocks’, the sort of companies Jordan Belfort trades on when he starts up Stratton Oakmont in The Wolf of Wall Street. At close of play yesterday, shares were worth $0.11, up from $0.006 just a day prior.
Where could this surge take Blockbuster? Likely nowhere, as its market value is beyond repair to hypothetically bring the nostalgic rental company back.
However, it’s really an indicator of how volatile the market is at the moment, already sparking the concerns of analysts, hedge fund operators, the White House and the Securities and Exchange Commission.
Jen Psaki, the White House press secretary, said: ‘Our team, our economic team, including Secretary [Janet] Yellen and others, are monitoring the situation. It’s a good reminder though that the stock market isn’t the only measure of the health of our economy. It doesn’t reflect how middle- and working-class families are doing.’
While some firms face insolvency from GameStop’s unprecedented rise, due to having shorted their shares, the company’s three biggest shareholders are up by around $2 billion in total.
Smaller traders may be collected sizeable returns, but Steve Sosnick, chief strategist at Interactive Brokers, warned The New York Times: ‘What happens in situations of stress is that people are forced to raise funds and that often means selling your winners. How does it end? Badly. Eventually, the bigger the balloon, the louder the pop. When does it end? I don’t know.’
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