[165][166] The regulators were not seen as likely to view the volatility as creating any systemic risks. [106] According to Morgan Stanley, a number of hedge funds covered their short positions and sold shares in their portfolio to reduce leverage and market exposure, in some of the largest such actions within 10 years. [21] r/wallstreetbets was the fastest-growing subreddit at the time the community surged by more than 1.5 million users overnight (to a total of 6 million members) on January 29. [88], By January 28, 2021, Melvin Capital, an investment fund that heavily shorted GameStop, had lost 30 percent of its value since the start of 2021, and by the end of January had suffered a loss of 53 percent of its investments. [160][161][162][163], On January 27, 2021, White House press secretary Jen Psaki said that Treasury Secretary Janet Yellen and others in the Biden administration were monitoring the situation. ", "Silver price hits eight-year high, as GameStop shares fall back", "Reddit users say they are not behind Monday's silver squeeze", "Redditors divided on shift to push up Silver", "Silver price surges amid investor frenzy but Reddit users say it isn't them", "Silver is surging but users on WallStreetBets say they're not behind the rally", "Biden administration 'monitoring the situation' with GameStop's stock, White House says", "Exclusive: Treasury's Yellen calls top regulator meeting on GameStop volatility, consults ethics lawyer", "Yellen to Meet Financial Regulators Thursday on Market Tumult", "Regulators Meeting on GameStop Frenzy Are Unlikely to Find Systemic Risk", "Pelosi says Congress will be part of GameStop scrutiny", "Breaking: Incoming Chairman @SenSherrodBrown's response to the current state of the stock market", "Private investors deserve to know Wall Street and hedge funds are not engaged in malicious behavior when the pendulum swings in favor of private investors, not corporate cronies. Approximately 140 percent of GameStop's public float had been sold short, and the rush to buy shares to cover those positions as the price rose caused it to rise even further. [54] Anthony Denier, the CEO of Webull, stated that increased collateral requirements for their clearing house meant Webull themselves were restricted from opening new positions. [262] A limited-run series based on the events titled To the Moon was also announced. GameStop (GME) closed the most recent trading day at $22.46, moving -0.4% from the previous trading session. Weaponising Social Media for Information Divide and Warfare. They borrowed GameStop, put up a margin requirement, immediately sold their shares, and waited for GameStop prices to drop (before eventually re-purchasing and returning the borrowed shares). #DeleteRobinhood", "Elon Musk lashes out at short sellers during GameStop market war", "Ja Rule, a Robinhood User Since 2014, Calls GameStop an 'Uprising', "Jon Stewart joins Twitter and defends the Redditors", "Jimmy Kimmel deletes tweet suggesting Jon Stewart sounded like Trump by backing GameStop traders", "Jimmy Kimmel Sparks Anger For Calling Reddit Investors 'Russian Disruptors', "Robinhood Hit With Class Action Suit for Muzzling GameStop Uprising", "Mark Cuban, Dave Portnoy, AOC and others react to Robinhood restricting trades on GameStop and AMC", "Wall Street may never be the same after GameStop saga", "Leon Cooperman on GameStop Reddit speculators: 'I'm not damning them' but it will 'end in tears', "Robinhood is getting trashed on Google Play", "Google Deletes 100,000 Negative Reviews of Robinhood App From Angry Users", "Robinhood plummets back down to a one-star rating on Google Play", "Protesters gather at Robinhood HQ, SEC, NYSE", "Angry customers show up at Robinhood's headquarters in the wake of GameStop trading chaos", "The GameStop Short Squeeze Shows an Ugly Side of the Investing World", "GameStop short-sellers Melvin Capital and Citron surrender their bearish bets after 700% rally drives huge losses", "Citron Research covered majority of GameStop short position in $90s/share", "Death Threats and Hate Force Hedge Funds to Step Up Security", "Robinhood and Citadel's relationship comes into focus as Washington vows to examine stock-market moves", "Robinhood Gets Almost Half Its Revenue in Controversial Bargain With High-Speed Traders", "GameStop Frenzy Puts Spotlight on Trading Giant Citadel Securities", "The Citadel Link: What Ken Griffin Has to Do With GameStop", "Robinhood, Citadel Win Dismissal of Meme-Stock Lawsuit", "Citadel Securities Says It Learned of Trading Curbs on Twitter", "Citadel Securities Faces New Pressure Over GameStop Frenzy", "Reddit rejoices as hedge-fund billionaire Ken Griffin fires back at those making #KenGriffinLied a trending topic on social media", "Court Filings Spark New Citadel-Robinhood GameStop Theories", "Here's what Robinhood executives allegedly said internally at the height of the GameStop short squeeze", "#CitadelScandal is trending on Twitter as retail traders express fresh outrage over allegations around meme-stock trading", "Netflix Finalizing GameStop Stock Movie Package; Mark Boal In Talks To Write, Noah Centineo Attached, Scott Galloway To Consult", "MGM Lands Rights To Ben Mezrich's Book Proposal 'The Antisocial Network'; Would Chronicle Recent Wall Street-GameStop Chaos", "Three GameStop movies are rushed into development. [12] This occurred shortly after a comment from Citron Research predicting the value of the stock would decrease. [173], Attorney General of New York Letitia James confirmed in a press release that her office would look into the matter, saying "We are aware of concerns raised regarding activity on the Robinhood app, including trading related to the GameStop stock". (2023). [228], Several celebrities and influencers also criticized Robinhood. Jan. 22, 2021: GameStop surges 50% As the tug-of-war between the everyday investors and hedge funds heated up and support grew for GameStop on r/wallstreetbets, the stock skyrocketed more than 50% in the trading session on Jan. 22. U.S. House Committee on Financial Services, Economic impact of the COVID-19 pandemic in the United States, settle a member's outstanding transactions, The Church of Jesus Christ of Latter-day Saints, Keith Patrick Gill's Opening Statement Before the U.S. House Committee on Financial Services, United States District Court for the Southern District of New York, United States House Committee on Financial Services, Massachusetts Secretary of the Commonwealth, "How you could lose everything by short-selling stocks, whether it's betting against GameStop or Tesla", "GameStop: how Reddit amateurs took aim at Wall Street's short-sellers", "Meme Stock Saga Officially Over? [60][58][61] Clearing houses include the Depository Trust & Clearing Corporation (DTCC) for equities and the Options Clearing Corporation (OCC) for options. They also questioned whether Robinhood was encouraging its customers to take excessive risks in order to generate a profit and whether it had the appropriate infrastructure and funding to handle influxes of new clients. It was previously branded as Textalytics. In one of the most notorious and publicized short squeezes of all time, the stock of video game retailer Gamestop exploded from around $17 per share in early January 2021 to an intraday high of. A variety of politicians and commentators across the political spectrum made statements in support of those driving up the price of GameStop and other stocks, as well as against Robinhood and other companies' decision to limit these trades, including Representative Alexandria Ocasio-Cortez,[205] Senator Ted Cruz,[206] Representatives Ro Khanna,[207] Ted Lieu,[208] and Rashida Tlaib,[209] Fox Business host Charles Payne,[210] and conservative political commentators Rush Limbaugh,[211] Ben Shapiro,[212] and Donald Trump Jr.[213][214], Senator Elizabeth Warren criticized both the short sellers and the buyers, and argued that more regulation was needed. 4,273 Jobs. [66] However, on January 31, Robinhood announced it had removed several of these restrictions and would only limit the sale of eight securities. GameStop was the most shorted stock on Wall Street in early January. [2][3], Short sellers are exposed to a risk of short squeezing, which occurs when the shorted stock jumps in value due, for instance, to a sudden piece of favorable news. [199][200][201], In June 2022, a 140-page report[202] released by the United States House Committee on Financial Services called for the Securities and Exchange Commission and the Financial Industry Regulatory Authority to craft new rules to address market risks highlighted by the events of January 2021, including a liquidity rule and framework governing liquidity planning for clearing brokers.[203]. GameStop Canada. In premarket trading, the price reached levels above $500, from around $17. 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Citadel Securities stated that they did not instruct any brokerage to suspend or otherwise limit trading, and Robinhood denied that it had been pressured by Citadel. GameStop shares lost 60 percent of their value on February 2, closing below $100 for the first time in a week. [73][74][75], On February 24, GameStop share prices doubled in heavy volume in the final 90 minutes of trading, with the company's stock halting twice, shortly before closing at $91.70, a 104-percent gain. Short squeeze is a term used by market participants to refer to a phenomenon where short sellers in a stock who have placed their bets on a stock's fall, rush to hedge their positions or buy the stock in the event of an adverse price movement, in order to cover their losses. [239], Disgruntled users review-bombed the Robinhood app on the Google Play Store after it halted the trading of GameStop securities, pushing its ratings down to one star. "[260], In February 2021, Deadline Hollywood reported on Netflix's plans to develop a movie based on the events, with Mark Boal in negotiations to write and Noah Centineo set to star in the film. [47], According to The New York Times, the short squeeze has called into question the viability of short selling as an investment strategy. [220], In a CNBC interview, Reddit co-founder Alexis Ohanian compared the rally to Occupy Wall Street, saying that "it's a chance for Joe and Jane Americathe retail buyers of stockto flex back and push back on these hedge funds. In ACM Conference on Hypertext and Social Media (Hypertext), Blue Sky . Meanwhile, apes remain confident that the stock can go. Even my 11 yr old traded w them and made $", "I remember when I met the @RobinhoodApp founders when they were raising their Seed, Series A and Series B. I passed. The lawsuit alleges that a call was set up between Robinhood CEO Vlad Tenev, and a redacted person at Citadel Securities. The typical short squeeze lasts one or perhaps two days, with the major price spikes often happening overnight.. [252][253] As Robinhood restricted trading of GameStop shares, users alleged that Citadel Securities directed Robinhood to do so. [196][197][198], In reaction to the short squeeze, some Democratic politicians have expressed support for a financial transactions tax, arguing that it would raise revenue and curb speculative betting. [57][58][59] Because there is a two-day lag between the moment when investors purchase a security and the moment cash and securities are actually exchanged, brokerage firms have to post collateral at clearing houses to guarantee the proper settlement of their clients' orders. Hello! [104][105], On January 26, it was reported that short sellers had lost a total of $6 billion due to the squeeze. Dozens of class action lawsuits have been filed against Robinhood in U.S. courts, and the U.S. House Committee on Financial Services held a congressional hearing on the incident. A group of angry Redditors have caused billions of dollars of damage to hedge funds shorting GameStop stocks. [37] In pre-market trading hours the same day, it briefly hit over $500, up from $17.25 at the start of the month. A brief history of short squeezes before GameStop. These shares were worth $44 million on December 31, but reached $1.1 billion when GameStop's stock reached $469, briefly making him a billionaire, before the value of his stock dropped to $901 million on January 29. GameStop dropped 44% on Thursday, falling for the first time in six days as Robinhood and Interactive Brokers limited trading in several of the heavily shorted names to closing positions only,. [169] Representative Byron Donalds called for Congress to launch "an immediate investigation into Citadel, L.L.C. 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