‘Shark Tank’ star Kevin O’Leary says GameStop could stage a Netflix-style comeback – and short-sellers should be worried

Kevin O'Leary
Kevin O’Leary.

  • GameStop can capitalize on its current fame to revamp its business, Kevin O’Leary says.
  • The “Shark Tank” investor suggested the retailer could execute a Netflix-style pivot.
  • O’Leary also warned against shorting the stock given its passionate following.
  • See more stories on Insider’s business page.

GameStop could leverage the hype around its stock to transform its business and stage a comeback, “Shark Tank” star Kevin O’Leary said in an interview this week.

The video-games retailer’s brand “has way more value today than it had five months ago, before it became part of every headline around the world, day after day,” O’Leary told Kevin Paffrath on the influencer’s YouTube channel, Meet Kevin.

The O’Leary Funds and O’Leary Ventures boss – whose nickname is “Mr. Wonderful” – attributed GameStop’s newfound fame to the Reddit and Robinhood users who executed a short squeeze on the stock. They helped boost the company’s stock price from about $17 to an intraday high of $483 in January.

O’Leary pointed to Netflix, which pivoted from physical disks to online streaming in 2007, as an example of a company that successfully made the shift to digital.

“Netflix saw the writing on the wall when they were mailing DVDs to everybody and said, ‘We’re gonna digitize this,’ and they had a brand,” O’Leary said. “Maybe GameStop can do the same thing,” he continued, suggesting the company could offer new services to gamers, or host classes and other gatherings in its stores across the US.

“I think it’s going to get a second kick at life,” he added.

O’Leary also warned investors not to bet against GameStop and its army of individual shareholders.

“If I was short that stock right now, I’d be worried,” he said. “With this whole social constituency supporting it, the pricing of the stock is kind of irrelevant at this point.”

Chewy cofounder Ryan Cohen, one of GameStop’s biggest shareholders and possibly its next chairman, clearly agrees with O’Leary that the company can deliver a second act.

The activist investor has overhauled the company’s board, wants to revamp its strategy to focus more on e-commerce, and likely spurred its recent decision to raise up to $1 billion by issuing new stock.

Read the original article on Business Insider

A Reddit forum founder who got banned from Wall Street Bets says the group is ‘tired’ of talking about GameStop – and that they really were behind the silver short-squeeze

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Ivan Bayoukhi, founder of WallStreetSilver.


Ivan Bayoukhi, the founder of subreddit Wall Street Silver, told Kitco News this week Wall Street Bets users are tired of talking about GameStop, and they did in fact trigger the silver short-squeeze in January, even though they said at the time this was not the case.

But the notorious subreddit had claimed they were not the ones behind silver’s rally as they were more focused on members buying into GameStop, AMC, and other heavily shorted stocks.

“The Silver Squeeze is a hedge-fund coordinated attack so they can keep fighting the $GME fight,” one user wrote last month.

Bayoukhi, who was among users calling for betting on silver, said one can just scroll back five to six months on the WSB forum to find several silver-related posts. Some posts would even mention the Hunt Brothers who managed to push silver prices from $6 an ounce to over $50 an ounce within a year more than three decades ago, he said.

“We’ve kept track of absolutely everything,” he said. “That’s in our extras section, or the information section on Wall Streets Silver reddit. We literally have a section for Wall Streets Bets posts for silver that they’ve deleted or kept up.”

But anyone attempting to post about silver on WSB, including Bayoukhi, was banned from the community because the majority of them didn’t want focus to stray from GameStop, he said. Still, at least 30 to 40% of the WSB forum loves silver, he said. This indicates there was conflicting opinion among members of the subreddit, with some wanting to continue the GameStop short-squeeze, while others wanted to expand it to silver.

“That’s why most of their users are coming to us for silver, because they’re tired of just talking about one stock all day.”

Shortly after Reddit day traders drove up the prices of GameStop earlier this year, silver prices rocketed to their highest since 2013, driven by messages urging Reddit day traders to buy the metal and hike its price. Some members of the community claimed to not be a part of it and banned posts that mentioned silver.

Bayoukhi compared silver to fiat currencies. When asked why he likes silver, he said traditional currencies aren’t backed by anything and 99% of them have failed historically. On the other hand, silver is used in everyday life, such as in solar panels or industrial goods, has affordability, and works as a real store of value and hedge against inflation, he said.

Read the original article on Business Insider

GameStop bucks market sell-off with 19% surge as Reddit chatter picks up

Reddit

Shares of GameStop surged 19% on Thursday, bucking a broader market slump amid a massive sell-off as the chatter on Reddit appeared to gain traction yet again. 

Wiping out its earlier losses, GameStop rose to its highest level since the beginning of February, when the frenzy surrounding the video game retailer lost steam following the massive short squeeze that drove prices up in January.

The spike Thursday came later in the session, when several Reddit users on the Wall Street Bets subreddit began posting consecutively, rallying behind the stock. 

Among the most popular posts was published on Thursday morning saying “GME IS UNSTOPPABLE,” which received more than 10,000 upvotes, the equivalent of “likes” on other social media platforms.

At around the same time, Ryan Cohen, a GameStop board member, tweeted a photo resembling a stuffed toy from a Pets.com advertisement. Some users in the comments interpreted the post as a positive outlook for the video game company.

GameStop closed higher by 6.10%, at $131.76 on Thursday. 

Other meme stocks such as AMC Entertainment and Koss however joined the rest of the market, closing lower for the day. The Nasdaq 100 erased gains for the year, plummeting from its February 12 peak.

Read the original article on Business Insider

UWM Holdings jumps 36% as its inclusion on FTSE Russell list sparks social-media chatter

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Reddit logo.

  • Shares of UWM Holdings Corporation jumped 36% as its inclusion on the FTSE Russell list sparked social-media chatter. 
  • The mortgage company will be added to the Russell 1000 and Russell 3000 indices. 
  • The addition fueled social media chatter that had already been focused on mortgages following Rocket Companies’ 71% surge in the previous session.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

UWM Holdings Corporation jumped as much as 36% to $12.45 on Wednesday after the mortgage lender’s inclusion on the FTSE Russell IPO list propelled social media excitement that was already brewing around mortgage stocks following Rocket Companies’ massive rally a day earlier.

UWM will be added to both the Russell 1000 and Russell 3000, according to a FTSE Russell announcement on Tuesday. The mortgage company is one of 47 newly public companies that will be joining the indices. 

The Russell announcement coincided with mortgage stock excitement on Reddit’s WallStreetBets forum following Rocket Companies’ recent rally. Rocket spiked 71% on Tuesday with some investors viewing its high short interest as a potential target for the next GameStop-like short squeeze. 

“Yes $RKT is absolutely mooning right now. Did you miss the RKT Rocket? Don’t FOMO on the way back down to earth. Great news, there’s another one on the tarmac ready for liftoff. It’s name is $UWMC,” one WSB user posted Tuesday night. 

The user also detailed UWM’s strong fourth quarter earnings, dividend announcements, and addition to the Russell 1000 and 3000 indices as “catalysts” for the stock. 

Shares of Rocket Companies were down 9.3% Wednesday.

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Rocket Companies surges 70% as chatter from Reddit’s Wall Street Bets spikes

GettyImages 1230440907
Reddit logo.

  • Shares of Rocket Companies soared over 60% on Tuesday amid a recent spike in chatter around the company on the Wall Street Bets subreddit.
  • In the past 24 hours, two users have posted screenshots of how much they individually invested in the company. Both have received thousands of upvotes.
  • Another post, however, reiterated that anything other than GameStop is a distraction.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell

Shares of Rocket Companies soared over 70% on Tuesday to their highest point since debuting in public markets in August 2020, amid a recent spike in chatter around the company on Reddit’s Wall Street Bets forum.

In the past 24 hours, two users have posted separate screenshots of how much they individually invested in the company. Both have received thousands of upvotes. Another post, however, reiterated that anything other than GameStop, including Rocket Companies, is a distraction.

The Detroit-based holding company has a high short interest, at nearly 40% of available shares, according to FactSet. It is also among the top candidates to be shorted by hedge funds, CNBC reported.

“Rocket’s rally today is demonstrative of the influence and staying power of the new market contingency of retail investors. After the Q4 earnings call, which announced a $1.10 special dividend and $1B buyback program, WallStreetBets users rushed in,” William Callewaert, a portfolio manager for a tech financing firm said, referring to the special dividend the company announced last week. 

Last week, retail traders on Reddit reignited the GameStop trade, sending shares up over 200% during the week, though the rally failed to generate the momentum seen last month. 

Rocket Companies reported fourth-quarter earnings last week that beat expectations. Increased adjusted revenue was at $4.8 billion, up 162% year-over-year, while net income grew to $2.8 billion, up 277% year-over-year. Increased Adjusted net income, meanwhile, ballooned to $2.3 billion, up 350% year-over-year.

Shares of Rocket Companies traded at $37 at 2:25PM ET on Tuesday. 

Read the original article on Business Insider

Man Group, the world’s largest publicly-listed hedge fund, built a system to analyze daily stock-trading posts on Reddit

reddit blind community
In this photo illustration, a Reddit logo is seen displayed on a smartphone.

Man Group CEO Luke Ellis said his hedge fund has built a system that tracks popular topics on Reddit’s Wall StreetBets, the forum behind the GameStop saga in January. 

During an analyst call, Ellis said that managers of Man Group, the world’s largest publicly-listed hedge fund, will be receiving daily reports detailing the trending names or companies being mentioned on the subreddit, according to Bloomberg

The report is meant to showcase the ability of the firm, known for its quantitative analysis, to use “technology to address investment problems that humans alone can’t handle efficiently,” Ellis, on the call said, according to Bloomberg

Last week, a group of traders on WallStreetBets targeted GameStop yet again. A user by the name of “KitrosReddit” explained in a post the potential for a “Mother of all short squeezes,” laying new plans for a “gamma squeeze” on the video game retailer. 

 

Read the original article on Business Insider

A schoolteacher from California wiped out $70,000 in savings trading on Robinhood. Here’s his message to first-time investors.

Hello everyone! Welcome to this weekly roundup of stories from Insider from Business co-Editor in Chief Matt Turner. Subscribe here to get this newsletter in your inbox every Sunday.

Read on for a first person account of an addiction to Robinhood, drama in the venture capital world, and the coronavirus sticking around forever.

Read time: 6 minutes.

occupy wall street reddit 4x3

Hello!

Latest: The Senate on Saturday acquitted Donald Trump after an impeachment trial over the Capitol siege. President Joe Biden said the “substance of the charge is not in dispute” and that we must “end this uncivil war.” Get the latest here.

This week: Whitney Wolfe Herd made history. 

As Candy Cheng reported, Wolfe Herd not only became a self-made billionaire, but she also became the youngest female CEO to take a company public. From Candy’s story:

Less than a decade ago, she filed a sexual harassment lawsuit against Tinder, which she cofounded.

“This is the day that I reclaim my own narrative,” Wolfe Herd told Insider.

You can read their interview right here. 

Separately, here’s another newsletter for your radar: Over 2.7 million people start their day with Morning Brew – the daily email that delivers the latest news from Wall Street to Silicon Valley. Sign up for their free newsletter here.


Robinhood addiction

A schoolteacher from California contemplated suicide after losing money trading on Robinhood. He penned this first person essay for Insider:

I have an addictive personality. When I was younger, I frequently played video games for up to 12 hours at a time. I later binged on other hobbies: golf, cycling, cooking, and even reading. But my most self-destructive foray was into the world of Robinhood, Wall Street Bets, and day trading.

Despite my obsessive personality, I’ve had moments of sound, cogent decision-making. When I graduated from college, I learned how to invest the proper way. That is, dollar cost averaging into a Roth individual retirement account, into a mix of diversified index funds that track well-known indexes like the S&P 500. I made a conscious decision to live a frugal lifestyle to save aggressively to secure my future.

I work in public education, and despite living on a teacher’s salary, in six years I was able to save up a respectable $70,000 by January 2020, of which $45,000 was invested in a Vanguard Roth IRA. I’m in my late 20s, so $45,000 in a retirement account, according to a compound-interest calculator, could grow to $300,000, up to $1 million, tax-free by the time I retire at 65. I was extremely proud of this feat, and saving money became fundamental to my identity.

But Wall Street Bets (WSB) popped onto my feed in mid-January 2020, and I started trading options with small amounts on Robinhood.

Read the full story here:

Also read:


Seed-stage VCs are in a fight for their lives

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From Berber Jin:

When a tiny two-person San Francisco startup named Stytch began pitching venture capital firms for its first-ever round of funding early last year, known as a “seed” round, the partners at venerable seed firm First Round Capital thought they were a shoo-in as the lead investor.

Instead another, bigger fund – Index Ventures – wanted a piece of the company and offered to buy shares at a higher price, setting off a bidding war, sources said. Word among the tech industry’s close-knit venture community got out about the heavy interest in Stytch, and other big investors entered the fray.

The startup still hadn’t launched a product yet but investors were attracted to its two cofounders, Julianna Lamb and Reed McGinley-Stempel, who had both worked for the red-hot fintech Plaid. 

It was Benchmark that won out as the lead investor, sources said. This was eyebrow-raising in the venture world, as Benchmark is best known as a firm that buys in after the seed stage.

Read the full story here:

Also read:


The coronavirus is going to stick around forever

Coronavirus vaccine
A pharmacist prepares the Pfizer-BioNTech vaccine.

From Andrew Dunn, Aria Bendix, and Hilary Brueck:

As the pandemic approaches its second year, the coronavirus has morphed into a tougher foe.

Several mutations that scientists have identified in rapidly spreading variants are particularly worrisome. They raise concerns that these strains will be more contagious or be able to at least partly evade protection provided by vaccines and by prior infections.

Let’s be clear: No one knows how the next phase of the pandemic will play out. Is a new strain already spreading undetected or lurking around the corner? How effective will these vaccines be in the long run? And just when can we think about returning to schools and offices, or getting together with older relatives again?

Despite this uncertainty, most scientists have accepted an unfortunate truth: The coronavirus will likely be part of our lives forever, though the pandemic phase will eventually end. Our best hope is for it to turn into a mild, flu-like illness rather than a deadlier, long-term threat.

 Read the full story here:

Also read:


ICYMI: Thinking of moving to Hawaii?

From Aki Ito:

Back in September, Sandra Kwan left San Francisco dreaming of the perfect Hawaiian life. The past five months haven’t disappointed.

A senior program manager at LinkedIn, Kwan works 7 to 3 from her apartment, which overlooks Waikiki’s surf breaks. In the late afternoons, she catches a few waves or goes scuba-diving or just sits on the beach, a three-minute walk away.

Depending on the weekend, she dives with pods of dolphins and reef sharks or scrambles up the island’s rocky ridges for panoramic views of the coastline. None of this would’ve been possible before the pandemic, when she worked out of LinkedIn’s office in San Francisco.

Kwan’s pandemic move has been great for her, and yet it’s also one vision of a better future for Hawaii. With the surge in remote work, the state may have finally found what it’s been searching for: a way for people to live there without a career tied to tourism.

Read the full story here:

Also read:

Here are some headlines you might have missed from the past week.

– Matt


The top 17 influencer marketers at brands who plan creative campaigns and partner effectively with creators on Instagram, TikTok, and YouTube

A Salesforce manager says she quit over ‘countless microaggressions and inequity’ at the $219 billion cloud-software giant

How to sell a show to Netflix with the help of an easily digestible pitch document, according to a workshop by one of the streamer’s execs

Bloomberg News has begun layoffs and nearly 100 people will be affected – read the full memo to staff

How to land a coveted federal judicial clerkship, according to 6 current and former clerks

5 threats that could kill the electric-vehicle stock boom that has sent Tesla and Nio soaring, experts say

Inside McDonald’s reckoning on race amid billion-dollar lawsuits and unprecedented new efforts

Ogilvy’s new chief Andy Main is leading a massive turnaround at the storied ad agency, but some insiders are wary of the new direction

Read the original article on Business Insider

CEOs are joking about GameStop, worrying it signals a bubble, and preparing for the next meme-stock boom

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The GameStop saga is still sparking conversations across corporate America.

Executives continue to marvel at the surge in the video-game retailer’s market capitalization to over $30 billion at one point. They’re questioning whether mass speculation among amateur investors is a bubble about to burst. At least one is ready to cash in if the meme-stock frenzy has a second act.

Here are the best comments from CEOs to date, drawn from earnings-call transcripts on Sentieo, a financial-research website. The quotes have been lightly edited and condensed for clarity:

1. “We can just change our name to GameStop.” – Mark Costa, CEO of Eastman Chemical, when asked if he would consider a SPAC spinoff to boost his company’s valuation.

2. “You have to pause and wonder, when GameStop is the most valuable company in the Russell 2000, that the world has certainly changed.” – Frank Gasior, CEO of BankFinancial.

3. “On GameStop and bitcoin, there are definitely bubbles out there.” – Scott Hartz, CIO of Manulife Financial Corporation.

Read More: These 3 cannabis stocks are ‘poised to be market leaders’ and have the infrastructure to grab up industry share when federal legalization happens in the US, according to an analyst for the top-performing ETF in the world this year

4. “GameStop required a very unique set of circumstances where the asset had been oversold. It’s not so much a GameStop movement. It’s a unique series of events that allow for a short squeeze.” – Muhamad Umar Swift, CEO of Bursa Malaysia Berhad.

5. “When you start looking at some of the alternative-energy stocks, you start looking at some of the small speculative stocks, what’s happened in the last several days with GameStop – there is an area that I think is overheated.” – Mark Stoeckle, CEO of Adams Diversified Equity Fund, highlighting bubbles in the market.

6. “The GameStop fever – we did see Japanese retail customers trading those shares a lot as well. It used to be when we talk about Japanese retail customers buying a US equity, it’s Amazon, Apple, Microsoft, something like that. But now they play around with the smaller stocks as well. Before the global financial crisis and before the internet bubble burst, we saw similar kinds of phenomena.” – Oki Matsumoto, CEO of Monex.

7. “The other problem is the GameStop thing that’s going on out there. We have a better feel for what’s going on right now, and I don’t see a dot-com bust.” – David Farr, CEO of Emerson Electric, comparing his current level of concern to his fears during the internet bubble and after the 9/11 terrorist attacks.

Read More: Bank of America shares 9 stocks to buy as the pandemic prompts consumers to shift their spending habits towards ‘solitary leisure’ activities like golf and biking

8. “The craziness in the market has very little impact on us, because we just don’t have any exposure to any of these kinds of companies. The high-flying growth stocks, the items that have caused the market to have these giant dislocations where you stare in amazement, we’re not in those. I wish I could tell you that we owned some in advance, and we benefited from them.” – Richard Pzena, CEO of Pzena Investment Management, asked about Tesla, GameStop, and bitcoin.

9. “We did that deal right at a time, where GameStop and AMC were destroying some hedge funds who got into a jam. It wouldn’t surprise me if some of them were in our stock and had to raise capital and just sold our stock.” – Ted Karkus, CEO of ProPhase Labs, discussing the downward pressure on  his company’s stock after it raised $37.5 million in a public stock offering.

10. “I don’t think we anticipated the spike related to GameStop. It got us thinking and we said, ‘Hey, it’s a good tool. We might as well have it back on the shelf.’ And so that’s why we renewed it.” – Thomas Hern, CEO of Macerich, explaining the shopping-mall owner renewed its at-the-market stock offering after watching its share price surge during the meme-stock frenzy.

Read the original article on Business Insider

‘Big Short’ investor Michael Burry blasts trading apps, calls Robinhood a ‘dangerous casino’

Dr. Michael Burry
The “Big Short” investor Michael Burry.

  • The “Big Short” investor Michael Burry criticized zero-commission trading apps on Tuesday.
  • Some sell order flows to Wall Street and encourage risky, short-term bets, Burry said.
  • Burry also blasted Robinhood’s gamification of investing, calling its app a “dangerous casino.”
  • Visit Business Insider’s homepage for more stories.

Michael Burry on Tuesday dismissed the idea that Robinhood and other trading apps were empowering retail investors and disrupting the financial industry.

“The #mainstreetrevolution is a myth,” the Scion Asset Management boss tweeted. “Zero commissions and gamified apps were designed to feed flows to the two most influential WS trading houses.”

Burry, best known for his starring role in Michael Lewis’ book “The Big Short,” was referring to Robinhood and some of its peers selling their order flows to Wall Street firms such as Citadel Securities and Virtu Financial.

Read more: UBS says bitcoin is a bubble and too volatile to diversify a portfolio, unlike gold – here’s why the bank says it could end up ‘worthless’

“A few HFs got hurt,” Burry said, referring to short-selling hedge funds such as Melvin Capital losing money during the meme-stock boom in January.

“But if retail is moving toward more trading and away from fundamentals, WS owns that game,” he continued. “#Stonks by design.”

In other words, Burry’s view is that the new generation of cheap, fun, and easy-to-use trading platforms are helping Wall Street instead of upending it. Specifically, they send order flows to the likes of Citadel Securities and push people into day trading instead of long-term investing, playing to the strengths of professional operations.

Read more: Credit Suisse says to buy these 16 ‘highest-conviction’ stock picks that are set to outperform despite the market’s contrarian view

Burry singled out Robinhood in a tweet last week, sharing screenshots from the app to argue it turns investing into a casino game.

“If this looks like a serious investing app to you, and NOT a dangerous casino ‘fun for all ages,’ you’ve been #gamified,” he said.

“We designed Robinhood to be mobile-first and intuitive, with the goal of making investing feel more familiar and less daunting for an entire generation of people previously cut out of the financial system,” a Robinhood spokesperson said in a statement to Insider.

“Our focus has always been on breaking down systemic barriers to investing to help more people take control of their finances.”

Burry’s comments may carry extra weight, as he’s most likely been a major beneficiary of the retail-investing boom. Scion owned 1.7 million GameStop shares at the end of September, which it could have sold for more than $250 million during the buying frenzy last month.

Read the original article on Business Insider

GameStop buyers pivoting to silver are ‘running their heads into a wood chipper,’ macro analyst Tony Greer says

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Silver bars.

  • GameStop investors shouldn’t see silver as their next big opportunity, TG Macro founder Tony Greer told Real Vision.
  • The market analyst said Wall Street Bets fans are choosing bad targets and risking heavy losses.
  • Here are Greer’s seven best quotes from the discussion.
  • Visit Business Insider’s homepage for more stories.

GameStop buyers who have shifted their focus to silver are making a big mistake, TG Macro founder Tony Greer said in a RealVision interview this week.

The market analyst – who edits the Morning Navigator daily newsletter and previously worked in Goldman Sachs’ commodity-trading division – argued that Wall Street Bets members are oversimplifying narratives around meme stocks and other assets, picking poor targets, and putting themselves at risk of heavy losses.

Here are Greer’s seven best quotes from the interview, lightly edited and condensed for clarity:

1. “I’m seeing the younger generation fry itself in meme wars. Unfortunately, you leave a lot of facts out when you start meming the crap out of every story on Earth. We’re watching the Icarus print of the market meme burn itself to shreds right now.”

2. “A whole bunch of them made a whole bunch of money in GameStop. But the reality is the weakest of those traders that waded into GameStop last are the ones that probably got caught holding the bag too, and lost a whole bunch of their own money.”

Read More: Here’s how one SPAC-focused Reddit group is trying to prevent pump and dumps as retail traders throw markets into turmoil

3. “The GameStop guys went after American Airlines, they went after silver. I’m inspired by their spirit, but they’re trying to create a short squeeze in an airline that has been depressed for 10 years, and trying to create a squeeze off of the lows in a holding that every mutual fund has been choking on for 10 months. I’m sorry, man, but you’re just going to wake up sellers.”

4. “They are not comparing apples to apples with GameStop to silver. They’re two different animals, and they will not behave the same when under attack.”

5. “They’re getting an education the hard way. There’s a lot of money being incinerated and there’s a lot of hot air being wasted on this story that’s not taking it in the right direction.”

Read More: Morgan Stanley explains why the frenzied day trading in GameStop, AMC, and other stocks is not proof of a full-blown bubble – and shares its advice for navigating a short-term correction

6. “These guys are running their head into a wood chipper, and it doesn’t seem like it makes sense.”

7. “We mined 800 million ounces of silver a year. We don’t mine any new shares of GameStop ever. These guys, I think, learned that higher prices in precious metals wake up sellers who own the precious metal and have another year’s worth of production that they may like to hedge.”

Read the original article on Business Insider