By Yasin Ebrahim
Investing.com – GameStop, AMC, Nokia (NYSE:) and a slew of other “meme stocks” backed by retail investors jumped in after-hours trade Thursday, after online trading platform Robinhood said it would lift some trading restrictions on the stocks.
GameStop (NYSE:) rose 31% to $259 in after-hours trade . AMC Entertainment (NYSE:) 21% to $10.56 after falling 56% on the day. Nokia ended the day down 13.25%, Naked Brand Group Ltd (NASDAQ:) rose 6% in after-hours trade, while Express Inc (NYSE:)11% and Blackberry (TSX:) rose 8%.
“Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed,” Robinhood said in a statement.
The battle between the short-sellers and the Redditors has intensified in recent days and captivated attention worldwide. But it’s not just the “little guy” or retail investor that has been riding the wave of momentum.
GameStop disclosed in a filing with regulators on Thursday that MUST Asset Management, a large shareholder in the company, has sold its entire stake in the company.
The move comes just a day ahead of what is widely expected to be another wild session of trading. Short options – bets against the price of these cohort of stocks – are set to expire, forcing another squeeze on the short-sellers that could see them potentially lose billions of dollars.
Earlier in the day, Robinhood and other online brokerages restricted trading in the cohort of “meme stocks,” and hiked margins requires, citing increased volatility.
The move drew ire from retail investors, who filed at least two federal suits demanding it reinstate trading of shares including GameStop, BlackBerry Ltd., Nokia Oyj (HE:) and AMC Entertainment Holdings Inc, Bloomberg reported.
The move from brokerages had caught the attention from lawmakers on both sides of the political aisle.
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
Texas Republican Senator Ted Cruz also backed calls for a probe into RobinHood’s decision to block retail investors.
Fully agree. 👇 https://t.co/rW38zfLYGh
— Ted Cruz (@tedcruz) January 28, 2021
As it stands, the Redditors have already drawn proverbial blood against Melvin Capital, with the latter reportedly closing out its short position on game stock for huge losses earlier this week.
The stage has been set for another wild day of trading. The Redditors appear determined to “hold the line,” a mantra littered throughout Reddit forum “wallstreetbets,” seemingly symbolizing somewhat of a battle cry to fellow holders to avoid selling their positions and caving into pressure. For all the hoopla surrounding the short-squeeze, there is however the risk that the “little guy” could end up losing a lot more than wealthier and experienced purveyors of Wall Street.
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