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Robinhood Restricts GameStop Trading Over Stock Frenzy Explained
There are a number of amateur traders taking the world by storm that has shocked Wall Street in recent weeks.
With the power of social media, investors piled into trades of several different companies pushing their stock prices to new heights in the hopes of teaching Wall Street a lesson.
Investors were able to coordinate on Reddit to drive shares of struggling companies which included GameStop, Blackberry, Macy’s, and even AMC.
Individual investors followed the popular Reddit page called Wall Street Bets to change the narrative by banding together to put the squeeze on at least two hedge funds that had bet that GameStop’s shares would fall.
Knowing that GameStop had been on the brink of bankruptcy, many hedge funds and professional money managers had been shorting GameStop, betting that it would decline.
Now amateur investors are buying shares and stock options and “increasing GameStop’s market value to increase to over $24 billion from $2 billion in a matter of days.”
As GameStop shares soar high, it is forcing big players to cover their bets by buying the stock, further increasing the stock.
The increase in stock prices has left big Wall Street institutions with losses of more…