GameStop stock plummeted today following restrictions implemented by Robinhood. This has led to an influx of anger, controversy, and responses from people in power and average joes. The move led to hundreds, thousands, and even millions being lost by investors who have been squeezing the stock.
GameStop stocks were a pretty poor investment in 2020, with shares topping out at about $20 a share at year's end. Despite the new consoles giving them a small life preserver, the retailer has been struggling for the last few years and that's expected to continue. The /r/WallStreetBets subreddit figured out they could short-squeeze the stock, along with others like AMC, and artificially inflated its value. This has led to panic on Wall Street and hedge fund investors, realizing the tables have been turned against them.
As stocks like GameStop boom, many new investors have signed up for Robinhood, an easy to use broker app. The app was the number one download on the App Store yesterday with Reddit trailing behind. Sadly, Robinhood blocked stock purchases on GameStop, AMC, and a number of high-risk but high-reward stocks. As a result, no one could buy any more of these stocks, only sell. This caused the stock to tank more so than it has at any point in the past few days. GameStop fell from $469 per share to $129 as users sold in a panic.
AMC saw a similar drop, going from just under $17 a share to $6.52 at its lowest. The official reasoning from the app seems to be to try and protect people from losing all of their money but ironically, it caused stocks to plummet. Many people in power weighed in, including AOC, Mark Cuban, VP of Blizzard Mike Ybarra, and Donald Trump Jr. This has led to political parties joining up together to focus on Wall Street, including the Biden administration.
Class-action lawsuits have already been filed in New York against Robinhood. Others such as Barstool's Dave Portnoy have called for more severe legal action against Robinhood and other powerful people on Wall Street, asking for jail time. Robinhood has been taking a lot of flack from social media with many noting the irony in their name and The drama and chaos continue to unfold as tensions are high. Many are hoping for a significant jump on Friday, allowing for big payouts on GameStop stock if everything goes right. With only a day to go, there's still a lot that can happen to throw a wrench in these plans.
Source: Robinhood