GameStop shares swung between double-digit losses and gains in the first few minutes of trading in New York after Robinhood clients reported trading restrictions on high-profile stocks including GameStop and AMC Entertainment Holdings Inc .
The wild trading of GameStop Corp. continued on Thursday amid trading restrictions on platforms such as Robinhood Markets.
Shares swung between double-digit gains losses in the first few minutes of trading in New York City after Robinhood clients reported trading restrictions on high-profile stocks including GameStop and AMC Entertainment Holdings Inc.
These and other actions are “not supported” on Robinhood, according to a note on at least one of its platforms. Interactive Brokers put AMC, GameStop, BlackBerry Ltd., Express Inc. and Koss Corp. in “liquidation only” due to the extraordinary volatility of the markets, the company said in a tweet. Wednesday TD Ameritrade from Charles Schwab Corp. also reduced transactions on GameStop, AMC and other titles.
“I’m actually surprised that the trading platforms are getting involved,” said Michael Pachter, analyst at Wedbush Securities Inc. “Unless there is something twisted in trading that suggests manipulation, they should really step aside and allow investors to trade whatever they want. ”
GameStop had jumped over 40% earlier, momentarily pushing the stock above $ 500. It has risen over 1,700% this year, fueling a rally in retail across the board and leading some short sellers to throw in the towel.
Trading has remained volatile since the last regular session in the US, in which the stock was up 135%. Earnings were briefly curtailed after release after the Reddit page that fueled this month’s wave was made private and then reopened by group moderators. By the time the original WallStreetBets board was down, an alternative forum called Wallstreetbetsnew was over 350,000 members.
The stock’s skyrocketing gains in January took GameStop’s market value to around $ 24 billion, making it larger than more than a third of the companies in the S&P 500 Index. Only Plug Power Inc. is biggest in the closely watched Russell 2000 Index, a long way from the end of 2020, when GameStop, then a $ 1.3 billion company, was firmly in the middle of that gauge.
“It’s going to wear out, like any other fad, but there will likely be an impact on the market as a whole,” said Marshall Front, chief investment officer at Front Barnett Associates. “The fact that these mind-boggling moves are happening after the S&P moved nearly 70% since March shows that there is a lot of room for a pullback.”
The rise of Gamestop has prompted analysts at Citigroup Inc. to warn investors that some exchange-traded funds are facing inordinate influence from the video game retailer as its boom has altered their makeup. Analyst Scott Chronert has advised clients to take “a special note” of ETFs that incorporate leverage into their funds. A larger allocation to the stock could significantly alter the fund’s performance for now until the rebalancing dates occur, he said in a report.
Exiting the shorts
The Reddit community has dominated stock trading all week, with retail traders targeting heavily sold stocks causing ripples in the market. Investors, including Melvin Capital, closed its short position on GameStop, while Carson Block of Muddy Waters said it had “massively reduced” its short positions in recent days to avoid getting burned.
The day-trading phenomenon landed in Washington on Wednesday, when the White House press secretary said US Treasury Secretary Janet Yellen and the Biden administration’s economics team were monitoring stock market activity around GameStop. and other heavily short-circuited companies. Federal Reserve Chairman Jerome Powell dodged questions on the matter at his regular political press conference.
Senator Elizabeth Warren spoke up, saying she intends to make sure securities regulators “wake up and do their job.” Shortly thereafter, the Securities and Exchange Commission said it was “actively monitoring” volatility in the options and stock markets.
(Updates with additional details throughout.)
–With assistance from Namitha Jagadeesh, Elena Popina and Bailey Lipschultz.