Japanese restaurant chain sees shares tumble after short-lived Gamestop-style rally
24/03/2021 10:00
By Hideyuki Sano and Rocky Swift
TOKYO, March 24 (Reuters) - Shares in Japanese restaurant
chain Global-Dining Inc 7625.T slid on Wednesday following a
Gamestop-style rally sparked by its lawsuit against a government
order to cut opening hours in response to COVID-19.
Much like Gamestop GME.N , whose shares soared earlier this
year as Reddit investors teamed up to squeeze short sellers,
Global-Dining's shares had been heavily shorted, which added
fuel to the rally.
The restaurant group surged 32.3% on Tuesday, hitting its
daily limit, after it filed a lawsuit against the Tokyo
Metropolitan government claiming its order to close 26 of its
restaurants at 8 p.m. was illegal and not based on scientific
evidence.
Its shares continued their rally earlier on Wednesday to hit
a three-year high, rising as much as 13.7%, before they reversed
course to slide 12.8%.
"Some retail investors liked the company's stance of
fighting the authorities and bought the shares," said Tomoichiro
Kubota, senior market analyst at Matsui Securities.
The lawsuit won sympathy among those who have seen the
social restrictions to curb the pandemic as an excessive
intervention in private activities.
"I bought shares today for the first time as I wanted to
support Global-Dining. The government's finger-pointing at the
company sucks," one investor commented in a popular Yahoo
Finance message board.
Japanese media said all but one of the 27 restaurants to
which the Tokyo government had issued the order were Global
Dining's.
The firm came to fame in 2002 when then-Japanese Prime
Minister Junichiro Koizumi and then-U.S. President George W.
Bush dined in one of its flagship restaurants, Gonpachi.
In the lawsuit, the firm, whose chains of eateries include
La Bohe'me, Zest, and Monsoon Cafe, called for damage
compensation of just 104 yen ($0.96), saying the case is not
about money.
Global-Dining also raised 13 million yen through
crowd-funding to finance the lawsuit, above a target of 10
million yen.
But others were more cynical, saying the company had been
struggling financially even before the pandemic.
The firm made net losses in four of the past five years,
with an accumulative loss of 2.14 billion yen.
On Twitter, while some praised the firm for standing up
against the government, others criticised it as being
irresponsible for keeping its restaurants open when most others
were compliant.
($1 = 108.61 yen)
(Reporting by Hideyuki Sano, Rocky Swift; Editing by Jan
Harvey)
((hideyuki.sano@thomsonreuters.com; +81 3 4520 1195;))