GameStop Stock Has A Terrible Day, Still Closes At The Unthinkable Price Of $US200

GameStop Stock Has A Terrible Day, Still Closes At The Unthinkable Price Of $US200
Graphic: Kotaku (Photos: Getty Images, Screenshot via YouTube)
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A trading lockout on GameStop stock by a number of investing apps led to the saga’s weirdest day yet: class action lawsuits, calls for hearings on Capitol Hill, and the suggestion that Treasury Secretary Janet Yellen might need to recuse herself from overseeing Wall Street’s latest shitshow because she took speaking fees from one of the hedge funds involved.

It all started before the stock market even opened. Early in the morning, commission-free trading app Robinhood blocked GameStop and a few other stocks because of “recent volatility,” letting users sell off existing shares but not buy more. Other companies like TD Ameritrade and WeBull eventually followed suit, though the latter later reversed course. Now Robinhood has announced it will slowly allow people to begin buying GameStop stock again on the platform starting tomorrow.

The damage was done, though. Both GameStop stock and the r/WallStreetBets community, which fuelled its rise, went haywire. CNBC asked everyone it could get its hands on what Reddit is and why it’s mad at hedge funds. Then the stock tanked, rallied, and dipped again, settling at a still bonkers price of around $US200 ($261).

Here’s a quick rundown of some of the other stuff that happened in-between:

  • Motherboard reported that over 50% of Robinhood users now own some amount of GameStop stock. And they got very mad when they couldn’t buy more, flooding the co-founders’ mentions on Twitter with angry responses and reviewing bombing the app’s Google Play Store listing.
  • Members of Congress weighed in. Rep. Alexandria Ocasio-Cortez called Robinhood’s move “unacceptable,” and Rep. Rashida Tlaib called it “market manipulation” and said the House Committee on Financial Services should hold a hearing to investigate. Senator Ted Cruz tried to hop on the bandwagon too, retweeting AOC, who responded, “You almost had me murdered 3 weeks ago.”
  • CNBC tried to get to the bottom of whatever the hell is going on again today, going so far as to ask its Washington D.C. insiders what Trump’s MAGA mob could teach the finance world about WallStreetBets. “Making American great again was literally about making America great again, getting back to a time in the past,” reporter Eamon Javers said during this morning’s Squawk Box. “People are explaining to me that the lure of GameStop is that this is a company that a lot of these investors remember from their childhood a better time before covid, and before the economic troubles of today.”
  • Someone in Massachusetts filed a class action lawsuit against Robinhood in the Southern District of New York. “Robinhood purposefully, wilfully, and knowingly removing [sic] 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,” it reads. The lawsuit also alleges that Robinhood pulled the plug on GameStop stock trading to benefit Robinhood’s “large institutional investors or potential investors.”
  • Some very weird context that doesn’t get the conspiratorial juices flowing at all: one of Robinhood’s business partners is Citadel Securities, which, as The Verge reports, pays the app to execute a certain amount of the trades that people make on it. Citadel Securities was founded by billionaire hedge fund manager Kenneth C. Griffin, who also founded an investment capital firm called Citadel. Citadel, which is separate from Citadel Securities, was one of the two firms that gave almost $US3 ($4) billion to help shore up the Melvin Capital, another investment firm which lost 30% of its fund’s value since the start of this year. That massive loss is based in part on GameStop stock’s incredible rise, which the firm had bet big against. Small world.
  • Citadel also paid over $US800,000 ($1,043,200) in speaking fees to now Secretary of the Treasury, Janet Yellen. This is why during today’s daily press briefing in the White House, press secretary Jen Psaki was asked if Yellen would need to recuse herself from monitoring the ongoing GameStop stock fiasco. “Seperate from the GameStop issue, the Secretary of Treasury is one of the world-renown experts on markets, on the economy,” Psaki said. “It shouldn’t be a surprise to anyone that she was paid to give her perspective and advice before she came into office.”
  • Finally, momentum seems to be moving in favour of some sort of reforms to the SEC that would see it more aggressively regulate Wall Street, hedge funds, and commission-free trading platforms like Robinhood. Sen. Elizabeth Warren went on CNBC to slam Robinhood’s forced arbitration agreements in its terms of service and the overall chaos springing from WallStreetBets’ ongoing feud with hedge funds shorting GameStop. “That’s the problem, how do you know who’s manipulating the stock at this point?” she said. “Are you entirely sure that there aren’t wealthy people on both sides? That hedge funds haven’t moved in on the side of the people who bid up the price of GameStop?” Fellow Senator Sherrod Brown also called for the Senate to investigate the issue.
  • In after-hours trading, GameStop stock continues to bounce around wildly. Some short positions of the company are reportedly set to expire tomorrow, which WallStreetBets has been waiting for to finish executing its attack on short sellers.
  • Robinhood co-founder Vladimir Tenev took to Twitter shortly after the stock market closed to stand by the company’s decisions to freeze trading on GameStop. “To be clear, this decision was not made on the direction of any market maker we route to or other market participants,” he wrote. He added that the platform will “allow limited buys of these securities” again starting tomorrow.

Yup. This one’s got it all. Except for $US2,000 ($2,608) checks and a vaccine. Those would be great. Any day now. Please.

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