GameStop found itself caught in the middle of a wild stock market frenzy – one that we haven’t since the feverish 80s – and one that some view as a clash between the public and the elite.
Robinhood restricted this Thursday, among other brokerage firms, trading in thirteen equities (Jan 29 pre-market): AAL +11%, AMC +51%, BB +17%, BBBY +15%, CTRM +12%, EXPR +45%, GME +96%, KOSS +97%, NAKD +36%, NOK +7%, SNDL +1%, TR +8%, TRVG +16%.
This was done based on the suspicion of market manipulation or collusion by users out of /wallstreetbets, a subreddit on Reddit (the back page of the internet), in something resembling a boiler room and pump ‘n dump set-up – but now online.
The conviction on the subreddit itself is different. They feel it’s the public’s surprise against the big financial institutions. A member of the community, Lous Rosmann, expresses his opinion:
“People seem aggravated at a financial sector that always seems to win while normal people seem to lose.”
A very risky move. Did anyone mention that naked short-selling is illegal?
Retail investors then stepped in by buying up the very few remaining outstanding shares, quickly taking the price from $40s to a high beyond $500, in a matter of days. A move that provoked financial institutions and clearinghouses and pressured the brokerage firms.
Perhaps that’s when all the money went into GME Ressources Ldt. (ASX: $GME) in Australia which also saw a +100% spike throughout the week.
Barry James from James Investment Research believes it was a wrong move from the brokerage firms to restrict client trading, as it then doesn’t constitute a free market.
The regulatory response ought to be huge, this is a job for the SEC and FINRA.
For more videos like this check out our YouTube channel and make sure to subscribe to get the latest scoop! 🎯
“It’s truly a modified pump and dump because, at the end of the day, it will most certainly go back down because it’s not trading on any rational, fundamental value.” – Jordan Belfort.
Buyer beware – the ones getting in at the end of the party could be the largest victims of this Ponzi.