GameStop shares plummeted in turbulent Thursday after brokers began to impose trade restrictions en masse, putting pressure on retail favorite, Robinhood..
The stock fell more than 43% at 11:10 am ET, after gaining more than 25% earlier in a multi-halt session. At some point, stocks rose in the premarket, briefly exceeding $ 500 a piece. Stocks began to fall as rumors spread that Robinhood and Interactive Brokers were restricting trading.
The wild leaps came after a surge of more than 130% on Wednesday, bringing GME to 466% in the week to date. Just a week ago, the stock was worth about $ 40..
Thursday morning David tepper (David Tepper), founder of Appaloosa Management, told CNBC that investors should be careful when playing with speculative issuers.
«In 1999 partyon.com was the one who kicked the shorts down and now it’s gangup.in. It all ended badly in 1999 when the dot-com bubble burst. Been there, saw. «Old scars», – he said Joe kernen (Joe Kernen) from CNBC.
GameStop was the hottest target on the WallStreetBets Reddit chat, where an army of home retail investors banded together to push stocks higher and crowd out short-selling hedge funds. The forum, which now has more than four million members, briefly became "closed" on Wednesday night, as the moderators stated that they «cannot enforce Reddit’s content policy».
One popular post on Thursday states: «Don’t be afraid of $ GME $ BB falling. Hedge Funds Trade After Hours To Scare You … CONTINUE BUYING AND HOLDING». The post quickly garnered over 1,000 comments in an hour..
Another popular community post read: «Buy high, never sell», with GameStop photo.
Some avid Reddit users have shared screenshots of their brokerage accounts, showing the monstrous gains from trading GameStop and other stocks..
«GameStop Stock is a game "musical chairs", and I advise investors to sell before the music stops», – said David Trainer (David Trainer), CEO of New Constructs.
Crowd of users Reddit began targeting other names that shorts heavily including Bed Bath & Beyond and AMC Entertainment.
On Wednesday alone, AMC soared 300%, bringing the weekly rally in stocks to over 450%. More than one billion shares in the previous session AMC passed from hand to hand in what was the biggest sales day ever. Bed bath cost & Beyond is also up 75% this week.
The highly speculative behavior of budding investors is unnerving many on Wall Street, as the growing losses of hedge funds could spill over to other areas of the market. Some also believe that these frantic purchases could undermine overall market confidence and destabilize conditions..
S indices&P 500 and Dow Jones Industrial Average suffered their biggest losses on Wednesday since October as fears of this trading mania intensified.
Co-founder of Reddit Alexis Ohanyan (Alexis Ohanian) said Thursday the GameStop stock trading frenzy was a turning point in the US investment landscape.
«I really think this is a momentous moment. I don’t think we will go back to the old world, because these communities, they are a byproduct of the connected Internet.», – said Ohanyan in an interview «Squawk Box». «Whether it is this or that platform, this is the new norm».