The saga of GameStop's stock price and the WallStreetBets Reddit community continues. Six days ago, Redditors used social media to mount a campaign to improve GameStop's stock price. In the days since, GameStop's stock price steadily grew up until Tuesday when it leaped to over 100 percent. While the reasons behind the jump have been a major story, a different controversy has since eclipsed the issue and led to GameStop's stock price plummeting.
Thursday morning, GameStop's stock price jumped to the highest it's been, nearing $500 according to Bloomberg. Following the quick rise, however, a brokerage app named Robinhood that many Reddit users have been using to purchase GameStop stock turned off the ability to buy the stock. Users could still sell their shares, but they could no longer be purchased through the app. Robinhood posted a message on Twitter citing "market volatility" as the reason why.
Robinhood's action caused the stock price of GameStop to dramatically fall as investor sales of the stock began to eclipse purchases. The Wall Street Journal reports that following Robinhood's decision, GameStop's stock price dropped more than 40 percent. Robinhood co-founder Vladimir Tenev has since said on Twitter that it plans to allow "limited buys of these securities" starting tomorrow, but that the app will continue to track the situation and "make adjustments as necessary."
Following the news that Robinhood would allow buying to resume on Friday, GameStop's stock began to recover. The Wall Street Journal reports that GameStop's stock price grew nearly 40 percent in after-hours trading. That's still far below the peak that GameStop's stock saw on Thursday, but it shows just how impactful Robinhood's decisions and public statements have been on the stock price today.
There are now questions regarding the legality of Robinhood and other apps' actions as a result of the ongoing controversy. Politicians including Representative Alexandria Ocasio-Cortez are already calling for an investigation. Ocasio-Cortez said, "We need to know more about [Robinhood's] decision," and that she supports a Congressional hearing into the matter, "If necessary."
GameStop, despite being the stock around which all these controversies are occurring, remains otherwise uninvolved. The company's Twitter account is focused on advertising games and gaming accessories. The use of GameStop's stock as a sort of protest or financial battle against hedge funds appears disconnected from the realities of the company's operations, and for now GameStop's stock price remains relatively high. What will happen tomorrow is entirely unpredictable.
Sources: Bloomberg, Robinhood, Wall Street Journal