It looks like the party might finally be coming to a halt. Major online stock trading platforms have pulled the rug out from under GameStop’s stock price, restricting transactions so that GME can only be sold, and not purchased.
GameStop’s stock price initially rose from yesterday’s close of $346.37 to almost hit $470. However, online trading platform Robinhood and Interactive Brokers announced restrictions on the sale of GameStop, AMC, and several other stocks that have become the target of organized buying thanks to social media platforms like Reddit.
With only the option to sell, GameStop’s price plummeted to a low of $126 after major players liquidated their positions. It now sits hovering around $240 as of this writing.
Many are crying foul over Robinhood’s move to restrict trading, including the WallStreetBets subreddit and congressional superstar AOC, saying that wealthy hedge funds and their investors have pressured trading platforms into stopping GameStop’s rally to prevent losses from their short positions. A class-action lawsuit has already been submitted in Southern District of New York court accusing Robinhood of market manipulation.
Wealthy Wall Street hedge funds lost billions of dollars thanks to WallStreetBets driving up GameStop’s stock price. The subreddit that describes itself as “if 4Chan discovered a Bloomberg terminal illness” noted that those wealthy hedge funds had all adopted massive short positions betting that GameStop’s stock would fall. Instead, WallStreetBets and other retail investors all piled on to purchase up as many GameStop shares as possible, driving the price up over 3000%.
One hedge fund, Melvin Capital, lost over $3 billion thanks to its exposure to GameStop. Analysts estimate that hedge funds lost $70 billion in value over the course of the GameStop feud.
It’s not just major brokerage firms that have started to move against WallStreetBets. Popular video chat program Discord banned the WallStreetBets channel for ignoring “multiple warnings” of “hate speech, glorifying violence, and spreading misinformation.”
The White House said yesterday that they’re monitoring the situation along with the Treasury Department.
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