money GameStop shares close down 60%, at $90/each
GameStop shares (GME) closed 60% lower on Tuesday to end the session at $90 a piece.
The losses were an extension of Monday’s declines when shares of the video game retailer closed down 30% following a massive short squeeze fueled by retail investors on Reddit’s WallStreetBets forum.
Trading volume on Monday was about one-third of the average of the past five sessions, according to Bloomberg data.
As the short squeeze phenomena on shares of the video game retailer garnered international attention — the stock soared more than 1600% in January — and the number of members of the WallStreetBets Reddit community rose to 8 million.
Short interest in GameStop has dropped to 39%, down from 115% in mid-January, according to IHS Markit data.
On Tuesday the trading app Robinhood eased limits on the maximum number of shares and options contracts on restricted stocks which users can add. Buyers can now purchase up to a maximum of 100 GameStop shares on the platform.
Other stocks on the restricted list include AMC Entertainment (AMC) and Express (EXPR). Those stocks closed down more than 40% and 30% respectively on Tuesday.
The short squeeze saga has been seen as a battle between retail investors and hedge funds which had heavily bet against the stock. Last week hedge fund Melvin Capital announced it closed its position on GameStop.
Last Thursday Robinhood restricted buying any GameStop during the entire session, drawing a backlash from lawmakers and users on the trading platform as the stock slid more than 60% intraday. A a class action lawsuit was filed against the company that same day.
Robinhood’s CEO Vlad Tenev later announced an easing of restrictions and denied any “conspiracy theory” saying the buying limits were made by a market maker or hedge fund.
“Our decision to temporarily restrict customers from buying certain securities had nothing to do with a market maker or a market participant or anyone like that putting pressure on us or asking us to do that. It was entirely about market dynamics and clearing house deposit requirements as per regulations,” Tenev told Yahoo Finance.
On Tuesday Silver (SI=F) saw a pullback after prices surged 10% on Monday. Retailer investors appeared to target the precious metal but members on the WallStreetBets forum said there is no short squeeze on silver, alleging it deterred from their efforts to take GameStop shares higher.
We've seen a lot of commentary about 'Reddit traders' and silver, but by our numbers only 3% of the mentions of tickers on wallstreetbets today were $SLV. Are they mistaking someone else for us as usual?
— wallstreetbets mod (@wsbmod) February 1, 2021
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
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