Wall Street was turned upside down last week by a stock not many people even considered a major player. The GameStop phenomenon caused some to rake in huge amounts of money, and others to lose huge.
Charlotte Hornets basketball team minority shareholders Gabe Plotkin and Daniel Sundheim, who purchased a stake in the team from basketball icon Michael Jordan in 2019, were hit hard by the GameStop trading war, Sports Casting reported.
When GameStop stocks surged, trading app Robinhood and other investment brokers restricted purchases of it and other short stocks. Jordan was caught in the drama.
The level of volatility that GameStop stock experienced is highly unusual. The recent price action in GameStop and several other stocks can be attributed to a phenomenon known as a short squeeze.
A short squeeze occurs when a stock or other asset jumps sharply higher, forcing traders who had bet that its price would fall, to buy it in order to forestall even greater losses, according to Investopedia.
Dallas-based GameStop, a mall-based retailer that sells games, consoles, and other electronics, saw its stock more than quadrupled in January alone. On Jan. 25, it opened about 50 percent higher than its Friday, Jan. 22, closing price and briefly rose by more than 115 percent before retreating at close, up by “only” 18 percent.
Jordan, the majority owner of the Charlotte Hornets, sold a stake in the team to Plotkin and Sundheim. Plotkin is the founder and chief investment officer of Melvin Capital, a hedge fund that has “reportedly required an infusion of almost $3 billion after likely incurring massive losses” as a result of the GameStop investors’ short-squeeze, Yahoo reported.
Billionaire Sundheim is the founder and chief investment officer of hedge fund D1 Capital Partner.
There’s not much known about the terms of the Charlotte Hornets sale or the exact nature of Jordan and Plotkin’s current business relationship. But in a statement announcing the September 2019 deal, Jordan said, “I’m excited to welcome Gabe (Plotkin) and Dan (Sundheim, founder and chief investment officer of D1 Capital) as my partners in Hornets Sports & Entertainment.
“While I will continue to run the Charlotte Hornets, make all decisions related to the team and organization, and remain the team’s NBA Governor, Gabe and Dan’s investment in the franchise is invaluable, as we continue to modernize, add new technology and strive to compete with the best in the NBA.”
Listen to GHOGH with Jamarlin Martin | Episode 73: Jamarlin Martin Jamarlin makes the case for why this is a multi-factor rebellion vs. just protests about George Floyd. He discusses the Democratic Party’s sneaky relationship with the police in cities and states under Dem control, and why Joe Biden is a cop and the Steve Jobs of mass incarceration.
Jordan continued, “Both Gabe and Dan are industry standard-setters and proven leaders, with a belief in philanthropy and a passion for the game of basketball. They share my commitment to Charlotte and the Carolinas, and I look forward to working with and learning from them.”
Plotkin and Daniel Sundheim stood to make money if the price of GameStop shares went down and lose money if it went up. Users of the Reddit board wallstreetbets drove up the GameStop stock price by 1700 percent in January, resulting in massive losses for Plotkin and Sundheim, which could create problems for Jordan, Sportscasting.com reported.
How does this affect Jordan? According to Radio.com, there was speculation that he might want to sell more of his Charlotte Hornets shares and that Plotkin and Sundheim might hope to buy the team outright. If both minority owners lost money in GameStop, they may have to sell their stake in the team to help cover those losses. That could mean that Michael Jordan may need to start looking for some new investors, Luke Norris wrote for Sportscasting.com.
Jordan may or may not have lost money in GameStop, but 2020 was a bad year financially for the NBA, the Charlotte Hornets or any sports team since the coronavirus pandemic began.
“The Hornets have been hemorrhaging money for close to a year now,” Norris wrote. “It’s been reported that Jordan’s net worth has dropped by somewhere in the neighborhood of $300 million over the last year or so, which is perhaps the reason for the rumors that he might be looking to sell more stake in the team.”
Even with a $300 million loss, the two-time Hall of Famer is still worth around $1.6 billion according to Forbes, which means he’s still the richest retired athlete in the world.
Stay up to date with all the latest news that affects you in politics, finance and more.
Sep 10 2021
Sep 02 2021
Aug 27 2021
Aug 18 2021
Aug 16 2021