GameStop stocks have been tanking following trading restrictions from major online trading platforms like Robinhood and others criticized for protecting hedge funds.
We can only categorize the situation with the GameStop stocks as the people rising against the rich, handing them a significant loss in the process. After significant Wall Street hedge funds and investors looking to make money decided to ‘short’ GameStop stocks, a group of Redditors from the subreddit, r/WallStreetBets, decided to turn the situation around and make a profit for themselves, which meant losses for the hedge funds.
The Redditors decided to ‘squeeze’ the GameStop stock, meaning driving up the price by investing, thereby generating a profit. With the stock prices rising to more than $400, the people looking to ‘short’ the stocks have been losing a lot of money, in the billions. However, major online trading platforms decided to pull the rug from under GameStop.
Major online trading platforms have restricted GameStop stocks, so that people cannot buy the stocks, only sell. This has resulted in the GameStop stock prices plummeting.
GameStop’s stock prices rose from yesterday’s close of $346.37 and rose to almost $470. However, online trading platforms like Robinhood and Interactive Brokers announced that they are restricting the sale of stocks of GameStop, AMC, BlackBerry, Nokia, and Bed, Bath and Beyond, citing the market as being “highly volatile.”
As a result of the restriction, the stock prices started to plummet. As of writing, the prices sit at $193.60. As the announcement came, many people started to criticize the move of restricting the trading. Robinhood especially got flak because it positions itself as a company which “democratises finance.” But the move looks like they are helping significant hedge funds and investors.
Prominent politician Alexandria Ocasio-Cortez joined in criticizing that wealthy hedge funds and investors have pressured online and offline trading platforms into stopping GameStop’s rise only to prevent their losses from their ‘short’ positions.
A class-action lawsuit has been filed against Robinhood in the Southern District of New York court for market manipulation.
The White House said that they are monitoring the entire situation along with the Treasury Department.