GameStop Stock Price Rebounds as Robinhood, Other Trading Platforms Lift Some Restrictions

The stock price of GameStop and other 'meme stocks' jumped overnight after Robinhood and other [...]

The stock price of GameStop and other "meme stocks" jumped overnight after Robinhood and other stock trading platforms announced they would resume "limited" trading of certain restricted stops today. As of press time, GameStop's stock price is nearing $350 a share, all but erasing the massive drop in price during yesterday's tumultuous day on Wall Street. GameStop and other "hot" stocks chosen by retail investors on the Reddit board /r/WallStreetBets all received price bumps overnight after Robinhood, a commission-free trading app, announced that it would allow for "restricted" purchases of stocks it had previously de-listed due to market volatility. AMC, another stock popular with individual investors, saw its price jump by 40% overnight after an equally rough day on Wall Street.

The beleaguered game retailer GameStop is at the center of Wall Street's biggest story, for reasons that have little to do with its performance. Retail investors (individual investors who use trading platforms like eTrade, Fidelity, or Robinhood to self-manage their portfolio) bought large volumes of GameStop stock over the last two weeks in a pushback against hedge funds that heavily bet on GameStop's stock price dropping. What followed was an unprecedented "short squeeze" created by those hedge funds scrambling to buy GameStop stock that caused GameStop's price surge by 900% over the last month. As news of this unique phenomenon became more widespread, more and more individual investors tried to jump in on the GameStop bandwagon. That led to many trading platforms limiting the ability to purchase shares of certain "high volume" stocks (i.e. stocks that were being heavily traded), which caused a mass sell-off and price drop yesterday.

The decision to restrict purchases of GameStop stock drew bi-partisan criticism, with Democratic lawmaker Alexandrio Ocasio-Cortez calling for Congress to investigate and appearing on a livestream on Twitch to talk about the crisis. In a statement last night, Robinhood CEO Vlad Tenev explained that Robinhood's sudden restrictions were caused by SEC capital requirements and other regulations.

While Wall Street is always in flux, the GameStop story continues to be one of the more fascinating financial stories in recent years. We'll provide more coverage about any new developments in this constantly shifting story.