GameStop shares explode after Robinhood lifts trade restrictions

By Chris MorrisFormer Contributing Writer
Chris MorrisFormer Contributing Writer

    Chris Morris is a former contributing writer at Fortune, covering everything from general business news to the video game and theme park industries.

    Volatility continued to swirl around GameStop Friday as shares in the video game retailer jumped more than 54% in early trading amid renewed enthusiasm on Reddit and the lifting of trade restrictions by Robinhood.

    The jump came after the stock plunged more than 41% yesterday, dropping from $91.19 to $53.50. Shares gave back some of their gains after the initial surge, but were still up more than 32% at 10:45 a.m. ET.

    Robinhood announced late Thursday that it was doing away with the temporary restrictions it had placed on stocks—including GameStop and AMC Entertainment—after last week’s run on GameStop that pushed it above $500 per share at one point and boosted the company’s market value to roughly $30 billion. Shares started the year at $17.25.

    “There are currently no temporary limits to increasing your positions,” Robinhood posted on its website late Thursday.

    Individual traders and members of Reddit’s r/WallStreetBets forum quickly sounded a rallying cry. Some are buying, many are holding, but no one on the forum says they plan to sell.

    https://twitter.com/DrVolb/status/1357645125455912966
    https://twitter.com/snow_oe/status/1357705302091702273

    WallStreetBets was behind January’s explosive growth in GameStop shares, as well as notable gains in AMC, Bed Bath & Beyond, and other companies that were in decline for much of last year. Massive buying by individual investors created a so-called short squeeze, which occurs when short-sellers—who bet a stock’s price will fall and sell shares they borrowed—have to buy shares in order to exit their positions, pushing the stock upwards.

    While Redditors, pundits, and hedge fund managers have had a lot to say about GameStop in the past three weeks, one critical party has avoided any comment on the activity: GameStop’s management.

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