At the onset of the pandemic, GameStop was one of the hardest-hit retailers, already suffering from the shift to online sales. Just last April, the company’s shares could be purchased for $3.25 each, but by close on Tuesday, they were valued at $148 a pop. The stock’s value began to rise when Ryan Cohen, founder of Chewy, began lobbying for the company to establish itself as a rival to Amazon. Wall Street viewed this as an opportunity to short the stock, which involves selling shares with the intention of buying them back after prices fall. Small investors saw the opposite and began buying up cheap stock, which caused a 300% increase in GameStop’s gains in the last year. Analysts remain unsure how the saga will play out, but they think that both sides will face consequences.
After days of rallies fueled by Redditors, investment app Robinhood has restricted the trading of several highly-volatile stocks. Affected stocks include GameStop, AMC, Nokia, Naked Brand, Koss, Express, BlackBerry, and Bed Bath & Beyond. Investors are only able to sell shares held with these companies. Our mission at Robinhood is to democratize finance for all… We continuously monitor the markets and make changes where necessary, Robinhood, via press release. Some users in the Reddit forum, r/WallStreetBets, are already proposing a class-action lawsuit, implying that Robinhood is guilty of “market manipulation.”. Similar freezes were instituted by TD Ameritrade and Charles Schwab on Wednesday