GameStop Pause Trading: Reason Why it Ended Early
By Erika Dee
Amateur investors are beyond mad. Trading platforms have limited their ability to buy shares of US games firm GameStop as well as other similar companies. Many took to social media to express their outrage.
The moves by Robinhood and Interactive Brokers after several days of dramatic trading produced massive gains for some stocks.
Robinhood Restricts Purchase of GameStop Shares
Shares in GameStop plummeted by as high as 55% after the limitations imposed.
This serves as another twist in the ongoing drama between these amateur investors and the experienced, more risk-averse, Wall Street giants.
Major hedge funds had bet billions of dollars that GameStop's share prices would drop but recent trends have shown they could be wrong.
As a result, they encountered major losses after amateurs, who were quite innovative and smart in how they are trading. Many of them are even swapping tips on social media sites such as Reddit, which ultimately drove up the share price by more than 700% in just one week.
Other firms, such as AMC Entertainment, Koss Corp and BlackBerry, also benefitted from this unseen gusto from the amateur investors. Their shares increased as they were embraced by day traders following hedge funds going against them.
The activity has caught the attention of regulators, who are monitoring trading more heavily as fears of illegal actions intensfied.
The amateur traders are adamant that they are not doing anything wrong nor illegal. Instead, they claim just playing the more experienced investors at their own game.
Amateur Investors Flood Social Media with Anger
As a result of these restrictions, apart from going to social media to air their misgivings, they are also vocal in online forums discussing possible legal action. They accused Robinhood and other brokerages for having put up their own form of market manipulation when they restricted purchases of these particular shares.
They support a capitalist free market only when it works for them. What we saw today was not a free market and it forced an awful lot of people to lose an awful lot of money," said Myron Sakkas of Coventry, a student at Warwick University. Myron is just 18.
The young investor also shared that he was quite optimistic about going into investment banking after his degree, but what is currently unfolding is making him lose trust of the financial system overall.
"When ordinary people try to make money in a system where only rich traders can make money, that's what happens," he told the BBC. "Maybe I won't trade for a while, to be honest," he added.
Tweets claimed it is apparent that bias exist.
Quickie #GameStop thread: The #Robinhood roller-coaster is a vivid reminder of whom our financial system benefits. Hedge funders like to think they provide social value, when really they are just guys (almost always guys) who have figured out how to game the casino... (1/7)— Michael Mechanic (@MichaelMechanic) January 28, 2021
Reactions against what they are tweeting equally abound, with many sarcastically trolling the youngsters. Some are quite enjoying the drama unfolding.