We also raised margin requirements for certain securities.Īmid significant market volatility, it’s important as ever that we help customers stay informed. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG. We continuously monitor the markets and make changes where necessary. In an appended blog post, Robinhood said: Perhaps right on schedule, traders were angered when Robinhood halted buying of $GME and another ticker, $AMC on the morning of January 28 2021: What Did Robinhood Do?Īs retail investors collectively drove the share price of $GME up, there were constant rumblings that at some point, someone would intervene and put a stop to it. On January 27 2021, we discussed some of the discourse surrounding a then-uptrending $GME, namely Elon Musk‘s real and not-real tweets about the short squeeze in progress:ĭid Elon Musk Tweet ‘If $GME Reach $1000 I Will Put the GameStop Logo on My Next Rocket’?Įventually, as Vice noted, the push to squeeze Melvin Capital via $GME moved off of Reddit’s r/wallstreetbets and on to other platforms, and the story became extremely hot. Because for the last few months, GameStop stock has slowly been increasing in price. So Citron and Melvin and other short sellers have been playing a fabulously expensive game of chicken. If they do this when a stock’s price is higher than their short, they will lock in their losses. These are companies that most (normal) people have not heard of but are a big deal in the financial world.Īs I mentioned earlier, short sellers at some point have to actually buy shares of the company they’ve shorted in order to close their positions and exit their deal. Another company called Citron Research shorted some large amount of GameStop stock and has also spent much of the last several months explaining why GameStop is a dogshit company that is going to fail. In this case, a company called Melvin Capital Management shorted millions of dollars in GameStop stock. In practice this means we are seeing one of the largest wealth transfers from the financial ruling class to the middle and middle-upper classes in recent memory, so it is, understandably, the only thing anyone is talking about.Īfter explaining “shorting” stock as betting any given ticker will drop in value and profiting when correct, the piece continued:
Essentially, many normal-ish people have made a huge bet against gigantic financial institutions and are currently winning. It was worth $100-ish at times on and, and as I write this it is worth close to $300. GameStop’s stock price jumped from $4 last summer to $20 at the end of 2020, to $40 two weeks ago.
What is going on is that GameStop, a company that sells physical copies of video games next to Auntie Anne’s pretzel shops in dying malls, is the most highly traded asset in the United States, a “meme stock,” and currently the primary front in a micro class war. What Happened with $GME (and $AMC)?Ī article did a good job of briefly summarizing the intense focus on GameStop ($GME) stock, and how it became a war of attrition between institutional money and retail investors (i.e., the little guy): There is, of course, a lot to unpack in that sentence, which we’ll try to do concisely.
Advertisements On Januthe popular stock trading app Robinhood controversially halted trading of two viral tickers ($GME and $AMC) following the improbable rally of $GME, leading to whispers that Robinhood was owned by Citadel - a capital firm purportedly adversely affected by the whole mishegas.
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