A leading finance expert has warned investors they could face big losses if they are caught up in the social media surge to buy GameStop shares.
Stock in the company rose by 60% in one day after influencer Roaring Kitty returned to social media to spearhead a buying spree.
Roaring Kitty, real name Keith Gill, was the man credited with causing the huge run on GME’s shares in 2021 which led to chaos on Wall Street.
Three years ago his advice led to a frenzy of investors, mostly normal members of the public, snapping up stock in the struggling company while major hedge funds had bet against it.
Investment platform Saxo has seen a 928% increase in the number of its clients trading GameStop – but experts there are warning of a big downturn coming along the line.
Oskar Bernhardtsen, Investment Strategist at Saxo, said, “The GameStop phenomenon is genuinely exciting. However, it’s hard to provide any insightful commentary beyond recognising it as general hype. This hype is reflected in our clients’ behavior, with the number of clients trading GameStop occurring at around 10 times the normal level at Saxo.
“People are chasing the stock, hoping for quick profits, but given the real value of the stock, it shouldn’t rise further. When looking at the actual company performance, GME should be trading at a lower price. However, with these phenomena, specific analysis is challenging as the price movements go beyond fundamental and technical analysis.
“If you jump in, you risk losing, but such trends can also continue to rise. It’s a risky wall street bet.”
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