The wild ride on Wall Street continues today, with some prominent politicians weighing in on what’s happened with stocks like GameStop and AMC this week. It’s complicated, so The Atlantic tried to sum up what is going on in one sentence:
The GameStop saga is a ludicrous stock mania born of pandemic boredom and FOMO, piggybacking off of a clever Reddit revenge plot, which targeted hedge funds, who made a reckless bet on a struggling retailer—and it’s going to end with lots of people losing incredible amounts of money.
GameStop soared over the last couple of days. Its 52 week low was $2.57, but over the last day, the stock skyrocketed to $483.00. At its peak, it was an increase of almost 2900%. Today, the stock started to sink, as did others who also rose on the Reddit train, but now there is a lot of unpacking to do. It’s not only important to understand what happened with the stocks rising themselves, but also about how companies like Robinhood reacted. That was one of the stock trading companies that halted purchases as the surge was occurring.
Dear Robinhood: I’m highlighting @RobinhoodApp because you say your mission is to “democratize finance for all.” Your actions in restricting customers from buying GameStop and AMC stock suggest the opposite. By only allowing people to sell, you are driving down share prices. Why? https://t.co/PnieCb4F1R
— Ted Lieu (@tedlieu) January 28, 2021
Robinhood’s action even has two political rivals in agreement.
Fully agree. 👇 https://t.co/rW38zfLYGh
— Ted Cruz (@tedcruz) January 28, 2021
The Financial Times reports, “A class action lawsuit was launched in New York alleging that “Robinhood purposefully, willfully, and knowingly removing the stock ‘GME’ from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market and manipulating the open-market”. Robinhood declined to comment.”
A source on Capitol Hill says House Financial Services is getting flooded with calls about GameStop and Robinhood by Reddit users who tracked down the relevant committee.
— Matt Ford (@fordm) January 28, 2021
Either @RobinhoodApp allows free trading or it’s the end of Robinhood. Period.
— Dave Portnoy (@stoolpresidente) January 28, 2021
To understand more on all of this Forbes put together a great explainer, check out the video above.