Large mutual and hedge funds, brokers where people buy and sell shares, short brokers, and GameStop stock investors themselves; all have lost money. And another victim of the massive stock buyback of America’s largest video game retailer was none other than basketball legend Michael Jordan.
If you are not aware of what is happening on Wall Street, don’t worry, here is a summary:
Analysts and small investors using the Reddit platform, organized themselves into a sub-forum where they decided to buy stocks of potentially bankrupt companies. Some companies were AMC, Blackberry, Nokia, among others; but the most important was the video game company GameStop, which has been making losses for years and was strongly affected by the health crisis caused by the pandemic.
This situation took the major experts and analysts of the main Wall Street hedge funds by surprise. Many of them had bet short against these companies, which, in a matter of days, increased in value on the stock market as a result of the share purchases.
Just to get an idea, GameStop shares went from $17 to a high of $469. But now they are sitting at a staggering $101. So, both those who bet short against GameStop, as well as those who bought shares in the physical store above $101 (with forecasts to go lower) and held those shares thinking they would continue to rise, are losing a lot of money.
This situation has triggered a whole series of political, legal, and economic reactions. If you want to read more details about this story, go to a previous article of El American titled: What the F*ck is Going on in Wall Street?
And what does Michael Jordan have to do with all this?
But of course, you’re wondering: how does all this affect Michael Jordan?
For starters, the basketball legend, leader of the historic Bulls and emblematic star of the Dream Team, after his retirement became a great entrepreneur and positioned himself among the richest people in the world.
“With a fortune that amounts to more than 1,600 million dollars, the current president of Charlotte Hornets, one of the franchises of the maximum competition of basketball in the United States, suffered millionaire losses in 2020 and also had a hard blow to his economy related to the last crisis that affected Wall Street”, says an article in the Argentine media Infobae.
The portal indicated that, according to Basketball Forever, “Michael Jordan has just lost an estimated 230 million dollars during the last 12 months due to the coronavirus pandemic, which paralyzed the NBA’s earnings for the second consecutive season”.
But, in addition to losing money on the strictly sporting side, Mr. Jordan was hit hard by the volatility in which the stock market became embroiled after the user group on Reddit decided to take a swipe at Wall Street short brokers.
Michael Jordan, saw a 2% loss in investments on a day marked by volatility resulting from the confrontation between retail investors who have put large investment funds on the ropes through the trading of shares of the company GameStop.”
But why MJ? Did he short GameStop? No! But one of his allied investors did.
As indicated by Basketball Forever, and as mentioned at the beginning of this article, the user campaign on Reddit caused big losses to many people, and one of the most affected was the investment fund Melvin Capital, managed by Gabe Plotkin and Daniel Sundheim, two important personalities in the world of finance who in 2019 teamed up with Jordan as partners in the Hornets.
“Jordan couldn’t have picked a worse time to welcome hedge fund giants Gabe Plotkin and Daniel Sundheim as investors in the Hornets,” said the media outlet specializing in NBA issues and its biggest stars. “Both have suffered “catastrophic” losses, as the ongoing war between hedge fund managers and amateur investors has wiped more than $5 billion from established hedge funds.”
This complex scenario for Melvin Capital may generate that Plotkin and Sundheim “seek to stop participating as shareholders of the North Carolina franchise. This would force Jordan to look for new personalities or investment funds to add to the Hornets’ project.
Just as Michael jordan has managed to transcend as a basketball legend and, subsequently, as a successful businessman, it remains to be seen if he will be able to recover from these last two setbacks: the economic and health crisis of the pandemic, and the volatility of the last few days in the market that affected his investment partners.