Trading Apps Surging After the GameStop Squeeze on Robinhood
Maybe it's taking people's minds off constant COVID-19 news, or maybe people are buying into the David vs Goliath narrative of Redditors vs Wall Street — whatever it is, the internet sure is loving the story of GameStop's stock surge.
For an overview of how this all started and who the main players are, take a look at our coverage here. Here's the latest on WallStreetBets, GameStop, Robinhood, and the craziness surrounding them.
Losses on 'short' positions top $70 billion
WallStreetBets' "short squeeze" tactics have led to losses of more than $70 billion for U.S. firms, most of which will be hedge funds betting on companies going under due to the effects of COVID-19 on the economy.
Ortex data, reported by Reuters, shows that as of Wednesday, there were loss-making short positions on more than 5,000 U.S. firms.
Robinhood, Reddit top the App Store
Aside from sending GameStop stock prices sky-high, the recent buying frenzy news also has no-fee trading app Robinhood and online forum app Reddit sitting on top of the most downloaded list of Apple's app store.
According to app data tracking firm Apptopia, neither app had reached previously reached such high numbers.
Both of these, have of course played a major role in recent events, with Reddit traders WallStreetBets, organizing via a subreddit on the popular forum platform, and trading via Robinhood, which has democratized sophisticated trading tools, such as options.
Robinhood halts trade of 'meme stocks'
Robinhood has, however, courted controversy by halting the trading of what it deems "meme stocks", Forbes reports — these include GameStop, AMC, BlackBerry, Bed Bath & Beyond, and Nokia, which are all targets of short positions and have therefore also been targeted by WallStreetBets.
U.S. lawmakers from both sides of the political spectrum weighed in on the Robinhood trading freeze on GameStop stock, CNBC reports.
Rep. Rashida Tlaib, D-Mich., a member of the Financial Services Committee, calling Robinhood’s move an example of "market manipulation."
The White House and the SEC say they are "continuing to monitor the situation," and have provided no further update.
Discord is no longer banning WallStreetBets
When news emerged on Thursday, Jan.28, that chat platform Discord had banned WallStreetBets for "hateful and discriminatory language," the world's richest man Elon Musk tweeted the following:
Even Discord has gone corpo …— Elon Musk (@elonmusk) January 28, 2021
The fact that Elon Musk used pejorative slang, "corpo", from the videogame 'Cyberpunk 2077', to refer to Discord seemingly taking the side of Wall Street, reflects how entrenched this story is in popular culture and memes.
Since then, Discord has announced that it is actually working with Discord to help moderate a new server, as well as to work on infrastructure due to huge demand.
“We will welcome the group back so long as they improve their moderation practices and follow our Community Guidelines," a Discord spokesperson told The Verge.
Famous names weigh in on events
The WallStreetBets story has countless big names weighing in on the action on social media — it has seemingly even motivated comedian and political commentator John Stewart to join Twitter. Stewart's first-ever verified tweet reads as follows:
This is bullshit. The Redditors aren't cheating, they're joining a party Wall Street insiders have been enjoying for years. Don't shut them down...maybe sue them for copyright infringement instead!!— Jon Stewart (@jon_actual) January 28, 2021
We've learned nothing from 2008.
Billionaire tech investor Chamath Palihapitiya, meanwhile, said he bought GameStop shares in the last week.
Though Palihapitiy closed his position after the latest stock surge, he has backed the Reddit traders, saying they can perform the same fundamental analysis as hedge fund managers, Business Insider reports.
Reddit investing frenzy spreads worldwide
The GameStop stock buying frenzy has reached a global audience via news outlets, social media, and Reddit. The result? Millions worldwide are scrambling to get in on the action.
As the Robinhood app is not available outside of the U.S., similar platforms from other countries have reported unprecedented demand for sign-ups.
London-based no-fee trading app Trading 212 tweeted the following yesterday, Jan. 28:
Due to the unprecedented demand, we have temporarily stopped onboarding new clients. Once we process the existing queue, we will be open for new registrations.— Trading 212 (@Trading212) January 28, 2021
In a new example of the truly bizarre side of this Reddit-fueled stock frenzy, Dogecoin, a meme-based parodical cryptocurrency, has risen 370 percent in the last 24 hours, CoinBase reports, due to Reddit and social media mentions.
Stock prices for GameStop, AMC, and other companies targeted by Reddit traders also continue to rise, CNBC reports, as analysts warn of "frothy market volatility."
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