GameStop shares have dropped nearly 60 per cent since its peak yesterday after online trading services controversially put blocks on its stocks.
Since Tuesday video game retailer GameStop’s stock has jumped nearly 140 per cent as it was caught in the middle of battle between Wall Street short sellers and independent traders.
This represented the culmination of a whopping 1744 per cent rise since the start of January, seeing stock prices jump from $20 to around $350.
The spike in share prices, driven by an army of independent traders from the Reddit community r/WallStreetBets, sent regulators and Wall Street giants reeling as some hedge funds faced billions in losses.
In an unprecedented move, trading services like Robinhood, Etoro and Trading 212 put blocks on GameStop’s stock, preventing anyone from buying or selling its stock.
This is unacceptable.
We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.
As a member of the Financial Services Cmte, I’d support a hearing if necessary. https://t.co/4Qyrolgzyt
— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
The move has drawn bipartisan criticism from the US government, with bitter rivals including democrat representative Alexandria Ocasio-Cortez and republican senator Ted Cruz both condemning the action.
RobinHood users are now suing the platform accusing it of manipulating the market.
The platform said in a statement: “Amid this week’s extraordinary circumstances in the market, we made a tough decision today to temporarily limit buying for certain securities.
“As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits.”
Alongside numerous lawsuits, the US senate’s banking committee also said it was set to launch a hearing into the “current state of the stock market”.
The committee’s chairman Sherrod Brown said: “People on Wall Street only care about the rules when they’re the ones getting hurt.”