GameStop , AMC Entertainment and BlackBerry shares sank on Thursday as online brokerages Robinhood Markets Inc and Interactive Brokers restricted trading in several social-media driven stocks that had soared this week. The trading frenzy shook stock markets in the United States and elsewhere as heavily-shorted stocks rallied, then sold off. The tug-of-war has pitted hedge funds and other short sellers against retail buyers, many motivated by commentary on sites such as Reddit.
AMC stock dropped 60 per cent. GameStop lost 23 per cent Wall Street’s main indexes rose.
GameStop, the video game retailer whose 1,700 per cent rally has been at the heart of the slugfest in the past week, initially rallied to more than US$480 a share, Refinitiv data showed. It was last at US$265.
“The Robinhood ban on those stocks have put a pretty good end to (the rally),” said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas.
“Everybody’s trying to hit the exit button at the same time. When you start spooking all the short-sellers, there’s nobody that keeps prices in check anymore.”
Robinhood also restricted trading in BlackBerry, Koss and Express, citing “recent volatility.” It faced a barrage of criticism from retail investors, celebrities and policymakers.
Interactive Brokers, another online trading platform, also restricted trading in those stocks.
“We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only,” it said.
Why are Gamestop stocks booming? Financial expert explains
On Twitter, many observers argued trading platforms were trying to protect Wall Street interests at the expense of retail investors.
“Robin Hood: a parable about stealing from the rich to give to the poor. Robinhood: an app about protecting the rich from being short squeezed by the poor,” Tweeted Jake Chervinsky, a lawyer for fintech company Compound.
Robinhood has seen business boom during the coronavirus pandemic as more home-bound consumers took to trading stocks online. The app now counts more than 13 million users.
Social media chatrooms are beginning to resemble the squawk boxes on trading floors as a new generation of retail traders gains influence.
AMERICAN AIRLINES JUMPS
American Airlines joined the list of stocks making gains as small-time traders broadened their battle with major Wall Street institutions, but it, too, was well off earlier highs as Robinhood restricted trading.
Shares in American Airlines jumped eight per cent. It reported earnings but investors said those were not enough to explain its stock move.
“It’s irrational day-trading, nothing fundamental. Same as GameStop, Tootsie Roll, Virgin Galactic, etc,” said Darryl Genovesi, Vertical Research analyst.
As the “Reddit crowd” has roiled the market, a basket of stocks traded mostly by hedge funds has fallen 2.5 per cent so far this year while a basket tracking retail favorites jumped 13.5 per cent, data from Goldman Sachs showed.
Before its retreat, GameStop briefly became the biggest stock on the Russell 2000 index of small caps, according to Zerohedge.
Dramatic jumps in GameStop, BlackBerry Ltd and AMC drew some to call for regulatory scrutiny.
“In terms of short interest being monitored, the U.S. markets are probably the most transparent, but there’s always room for improvement,” former SEC chairman Jay Clayton told CNBC.
Silver industry shares also caught traders’ attention. Canada’s First Majestic Silver was halted briefly in New York after shares rose more than 30 per cent.
Heavily-shorted stocks were also active in Australia and Europe.
U.S. equity markets rebounded more than one per cent early. On Wednesday, the short squeeze – where a rising stock price forces traders to abandon loss-making “short” bets that it will decline – fueled a two per cent slide in New York’s S&P 500 as investors sold other assets to cover their losses.
Short-sellers are sitting on estimated losses of US$71 billion from positions in U.S. companies this year, data from analytics firm Ortex showed.
In one Reddit discussion, thousands of participants responded “We love this stock” to a post that called for more buying of GameStop.
The war began last week when hedge fund short-seller Andrew Left of Citron Capital bet against GameStop and was met with a barrage of retail traders betting the other way. He said on Wednesday he had abandoned the bet.
Long derided by market professionals as “dumb money,” the pack of traders, some of them former bankers working for themselves, has become an increasingly powerful force worth 20 per cent of equity orders last year, UBS data showed.
White House monitoring stock situation involving GameStop, other firms
The constant march upward of stock markets over the past decade, fueled by a constant flow of newly created money from major central banks, has made it less risky to bet on shares rising.
The U.S. Federal Reserve kept those taps firmly open at this week’s meeting.
The market turmoil caught the attention of the White House, with President Joe Biden’s economic team – including Treasury Secretary Janet Yellen – “monitoring the situation.”
Massachusetts state regulator William Galvin called on NYSE to suspend trading in GameStop for 30 days to allow a cooling-off period.
“The prospect of intervention here is clearly high, but this will just galvanize the (WallStreetBets) community as it just brings home the feeling of inequality in financial markets,” said Chris Weston, head of research at broker Pepperstone in Melbourne.
(Reporting by Sagarika Jaisinghani, Shriya Ramakrishnan, Medha Singh, Ismail Shakil Sruthi Shankar and Sanjana Shivdas in Bengaluru, Michelle Price, Anna Irrera, Saqib Iqbal Ahmed and April Joyner in New York; and Thyagaraju Adinarayan in London; additional reporting by Chuck Mikolajczak, Jeff Lewis, Tracy Rucinski, Devik Jain, Ankit Ajmera Writing by Patrick Graham and Nick Zieminski; Editing by Saumyadeb Chakrabarty and David Gregorio)
With files from Global News
© 2021 Reuters
If Elon Musk scraps Twitter deal, here's what may happen to the stock – Yahoo Canada Finance
Twitter investors should brace for an all-out crash in the stock price if Tesla CEO Elon Musk abandons his bid for the social media platform, warns one veteran tech analyst.
“In the absence of a bid, we would not be surprised to see the stock find a floor at $22.50,” said Jefferies analyst Brent Thill said Tuesday in a new note to clients. Such a price would be about 40% lower than Twitter’s current trading level.
Musk’s outstanding deal for Twitter is for $54.20 a share.
The path is being cut for that price put forth by Thill for Twitter shares, by Musk’s own doing.
In an early morning Tweet, Musk said “Yesterday, Twitter’s CEO publicly refused to show proof of <5%,” adding that “this deal cannot move forward until he does.”
The new tweet from Musk arrives after a tense exchange on the social media platform on Monday.
Twitter CEO Parag Agrawal wrote a long tweet thread to try to counter Musk’s claims the platform was chock full of fake accounts.
“We suspend over half a million spam accounts every day, usually before any of you even see them on Twitter,” Agrawal said in the 13-tweet thread. “We also lock millions of accounts each week that we suspect may be spam — if they can’t pass human verification challenges (captchas, phone verification, etc).”
Musk responded with a poop emoji.
Musk, the world’s richest person on paper, then followed up 14 minutes later with: “So how do advertisers know what they’re getting for their money? This is fundamental to the financial health of Twitter.”
Thill says Musk is simply trying to negotiate a lower price for Twitter. A fair value for Twitter in light of the rout in tech stocks in recent months would be $42 a share, Thill estimates.
Other analysts on Wall Street think a deal doesn’t get done.
“The chances of a deal ultimately getting done is not looking good now and it’s likely a 60%+ chance from our view Musk ultimately walks from the deal and pays the breakup fee,” Wedbush tech analyst Dan Ives said in a note to clients.
Why You Can’t Just Order Baby Formula From Canada – Lifehacker
With baby formula continuing to be in short supply, parents of infants are looking for creative ways to get their hands on that precious Enfamil—but a simple, seemingly ingenious solution that’s going viral right now will not work as described. The suggestion that’s spreading on Facebook and Twitter advises parents to go to Amazon and change their account’s country from the U.S. to Canada.
The claim is that if you do this, you will be rewarded with all kinds of baby formula-purchasing options—because Canada doesn’t have a major formula shortage. The problem, however, comes when you want to get the formula (or anything else) actually delivered from Amazon Canada. The company will only ship products within Canada, so unless you have a friend in Manitoba, it’s not going to work.
Amazon’s shipping restrictions page says:
Certain restrictions prevent us from shipping certain products to all geographical locations. Restrictions for specific items may require the purchaser to provide additional information in order to ship the item.
You might be able to find a third-party formula shipper on Amazon, but this is expensive in terms of shipping costs, and it might not be legal, depending on the kind of formula being imported.
The FDA’s role in all this
The larger issue of why the U.S. as a nation doesn’t import more baby formula is more complicated than Amazon’s rules. Only about 2% of the U.S.’s formula comes from foreign sources. February’s recall from major manufacturer Abbott threw off our delicate national formula supply chain, and correcting the problem presents some serious challenges.
If it was some other commodity, maybe more could have been imported quickly, but we’re particular about our baby formula. Formula has to meet the FDA’s nutritional standards and other requirements to be sold here. While European brands of formula generally meet or exceed the FDA’s nutritional requirements, (so much so that there’s a black market for foreign formula) the packaging and other aspects of the products are a different story.
The recall and FDA approval is only part of the story—the rest is economics.
Tariffs and dairy protection
In order to protect the U.S. dairy farming industry and U.S. formula manufacturers, the tariff on importing baby formula is set at 17.5% for most kinds of infant formula. The recently revamped NAFTA agreement actually raised the cost of importing Canadian formula, discouraging anyone from building a new plant there, and making it costly to import any excess from Canadian factories.
Light at the end of the tunnel?
While there’s no way to change tariffs quickly, the government is taking other steps to try to end the crisis. The FDA this week announced plans to ease the shortage through loosening up some of its rules (but not the ones covering nutritional requirements), and Abbot today announced its facility should be back online, with new safety standards in place, in a couple weeks.
NS gas prices jump by 9.5 cents – CTV News Atlantic
Tuesday was another record-breaking day for gas prices in Nova Scotia after they jumped by 9.5 cents overnight — just four days after they had reached $2 per litre in some parts of the province.
The minimum price of regular self-serve is now $2.08 per litre in the Halifax area, or Zone 1. The new maximum price is $2.10.
The biggest jump was in Cape Breton, or Zone 6, where the minimum price of regular self-serve gas is now $2.10 per litre. The maximum price is $2.12.
There were long lineups at some Nova Scotia gas stations Monday night after the Utility and Review Board announced that it would invoke its interrupter clause at midnight.
The price of diesel did not change Monday. However, the UARB said Tuesday that it would invoke the interrupter clause, and the price of diesel oil would be adjusted at midnight.
The price of gasoline won’t be affected by the adjustment.
The UARB said the price adjustments are “necessary due to significant shifts in the market price” of gasoline and diesel.
Gas prices are showing no signs of letting up as the average price in Canada tops $2 a litre for the first time.
Natural Resources Canada says the average price across the country for regular gasoline hit $2.06 per litre on Monday for an all-time high.
The average was a nine-cent jump from the $1.97 per litre record set last week, and is up about 30 cents a litre since mid-April.
Gas prices have been climbing steadily since late February when oil spiked to around US$100 a barrel after Russia invaded Ukraine. The price jumped to over US$110 per barrel last week.
Record-high gas prices fuel frustration
When Sam Vatcher saw the price at the pumps in Halifax this morning, she was shocked.
“I don’t know how anyone is going to drive anywhere,” said Vatcher.
The latest prices have SUV driver Bill Foster wondering how he will be able to afford fuel going forward.
“I’ve got to get kids to sports and I’ve got to get kids to school,” said Foster. “Other stuff is going to have to get cut out just to pay for gas.”
In addition to the conflict in Ukraine, gas analyst Patrick Dehaan says the high gas prices are also largely linked to the pandemic.
“Canadians and Americans’ global consumption plummeted along with oil prices,” said Dehaan. “To the degree that oil companies started shutting down production. That was the problem.”
Dehaan said, during the pandemic, oil production went offline. Then, as the economy reopened, Canadians started leaving their homes and travelling more.
“Global demand started going back up,” he explained. “But because of the shutdowns, we very quickly developed an imbalance between supply-and-demand that has grown over time.”
As a result, some feel Canadian consumers will move away from oil and gas in favour of electric vehicles.
Electric vehicle advocate Kurt Sampson says he tells his children every day, “when you are older, and when you grow up it will be the opposite. Everybody will be driving electric vehicles.”
Sampson has an app on his phone that tracks fuel savings. By switching to an electric vehicle and not purchasing gas, he is on pace to have yearly savings in the range of $8,000.
“Electric vehicles are cheaper to own and operate,” said Sampson. “If you do the long-term calculation, not just a sticker price, they will save you money. They are also better for the environment.”
Sampson said drivers are increasingly switching to electric vehicles, and with fuel prices continuing to climb, he expects the trend to increase even more in the coming years.
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