GameStop Stock Soars 100% As Robinhood Lifts Restrictions
GameStop stock has increased by 100% after trading app Robinhood decided to lift its restrictions.
Thanks to Reddit, some of the 37-year-old games company’s biggest stockholders generated a massive $2 billion, however, Robinhood then blocked people from purchasing any more GameStop stocks via the app.
Informing users of the block, Robinhood said in a statement – referring to GameStop as $GME – yesterday, January 28, ‘We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK.’
GameStop’s stock shares peaked at $492.42 per piece, but rapidly declined to $197.44 as a consequence of Robinhood’s block, along with other with traditional brokerages like Charles Schwab and TD Ameritrade imposing restrictions as well.
The investment app received backlash for the move and were slapped with a class action lawsuit today, January 29. Massachusetts resident Brendon Nelson filed the suit on behalf of all US users, claiming Robinhood ‘deprived their customers of the ability to use their service, abruptly, purposefully, wilfully’.
Robinhood resumed purchases of GameStop today, and in the aftermath the electronics retailer’s shares surged in premarket trading, gaining 100% as of 4am ET, reported CNN.
In another statement shared yesterday, Robinhood wrote:
Amid this week’s extraordinary circumstances in the market, we made a tough decision today [yesterday, January 28] to temporarily limit buying for certain securities. As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits.
It continued, ‘Starting tomorrow [today, January 29] we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed. To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to.’
Despite the losses GameStop faced yesterday, its shares are still up 950% increase in 2021, after ending 2020 with share priced at just under $20.
Robinhood also commented on the fact that ‘investing is for everyone’, and not just those on Wall Street.
It wrote, ‘This past year, we’ve seen the financial markets become a voice for the voiceless. We’ve seen a new generation of people come into the markets, sparking conversations about what it means to be an investor. Our customers have shown the world that investing is for everyone – not just institutional investors and hedge funds.’
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