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? [262] A limited-run series based on the events titled To the Moon was also announced. [71] The short squeezed securities' prices continued to decline during the week. Several committee members expressed skepticism at the practice of payment for order flow and pressed Griffin and Tenev on the issue. [245][246][247] Several financial executives hired additional security due to online threats. Market mechanisms include the reality that some people will attempt to game the market mechanisms and some will pay the price. [46] On that day, GameStop's total market cap reached $33.7 billion which made it temporarily the highest valued company on the Russell 2000 index. [76][77][78] Similar gains, although not as high, were reported with cinema operator AMC, clothing retailer Express and communications software group BlackBerry. [184][185] Several other investors began using the app DoNotPay to automatically join the lawsuit. "[234] Barstool Sports founder David Portnoy also criticized Robinhood for its lack of "free trading". "[258][259], During the Congressional hearing, lawmakers asked Ken Griffin if anyone in Citadel pressured Robinhood to restrict trading, to which he answered, "absolutely not. [184][185] The lawsuit, which was filed in the United States District Court for the Southern District of New York, claimed that Robinhood "purposefully, willfully, and knowingly removing the stock 'GME' from its trading platform in the midst of an unprecedented stock rise thereby deprived retail investors of the ability to invest in the open-market"; the lawsuit also accused Robinhood of "manipulating the open-market". [181], On March 17, 2021, the Financial Services Committee held a second hearing, which focused on the regulation of payment for order flow[182] and gamification of investing. 1984. [179][180] Representatives focused their attention on Robinhood's role in the event, asking Tenev why the brokerage had limited the trading of some securities and if it had clearly communicated its business model to its customers. https://www.reddit.com/r/wallstreetbets/, After GameStop's stock closed up 92.7 percent on January 26, business magnate Elon Musk tweeted "Gamestonk!! [111][112] GameStop CEO George Sherman owns over 2.3 million shares in the company, according to Bloomberg News. As a result, GameStop's stock price declined, leading many institutional investors to short sell the stock. In 2008, Porsche gobbled up so much Volkswagen's stock it . Ehsan-Ul Haq, Gareth Tyson, Tristan Braud and Pan Hui. [88], After GameStop's share price spiked again in May 2021, it was reported that Light Street Capital, run by so-called "tiger cub" Glen Kacher, was down more than 20 percent during 2021. Hence, the initial short squeeze triggered a gamma squeeze and pushed GameStop stock to highs of $325. [85], On March 25, the stock rose 53 percent from its previous day's decline of 34 percent. [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. Dude everyone thinks I'm crazy, and I think everyone else is crazy. #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. Let's make this situation easier to understand with an . 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. [17][18][19] Gill, a 34-year-old marketing professional and Chartered Financial Analyst (CFA) from Massachusetts, stated that he began investing in GameStop during the summer of 2019, after believing the stock to be undervalued. [235] More generally, it was recognized that Wall Street was now subject to the same populist vigor (afforded by Internet connectivity) as the entertainment industry, politics, and so on. In premarket trading, the price reached levels above $500, from around $17. This decision attracted criticism and accusations of market manipulation from prominent politicians and businesspeople from across the political spectrum. Several Wall Street analysts released research . [263] Jaime Rogozinski, who founded r/wallstreetbets in 2012, sold off his life experience to RatPac Entertainment,[264] and a documentary based on the event, created by the studios XTR and The Optimist and partially funded by a Kickstarter campaign, is also in the works. [177][178] On February 18, 2021, the committee, chaired by Representative Maxine Waters, held a remote hearing titled Game Stopped? [174][175], Texas Attorney General Ken Paxton said he would also investigate the decision of brokerages to limit the buying of securities related to GameStop and other stocks, saying that it "stinks of corruption". Canada - Franais. Weaponising Social Media for Information Divide and Warfare. [241] However, after another round of negative reviews on the app dropping it to a 1.1-star rating, Google confirmed that the new reviews do not violate Google policies and will not be removed. 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. [12][28] According to Dow Jones market data, more than 175 million shares of GameStop were traded on January 25, the second largest total in a single day, surpassing its 30-day average volume of 29.8 million shares. Find the latest GameStop Corp. (GME) stock quote, history, news and other vital information to help you with your stock trading and investing. [159] Users on r/wallstreetbets deny involvement in the increasing price of silver, instead blaming the increase on institutions and hedge funds with positions in silver, such as Citadel, seeking to offset losses on GameStop. [40], On January 27, r/wallstreetbets triggered a short squeeze on AMC Theatres (ticker symbol: AMC), a company in a similar position to GameStop. [56], Several brokerage firms, including Robinhood, stated on January 29 that the restrictions were the result of clearing houses raising the required collateral for executing trades. ", "Nokia's stock soars toward a record gain on record volume, for no apparent reason", "Brokerage Firm Siebert Soars as Reddit Feed Targets Another Short Squeeze", "Reddit's GameStop gang pushes Tootsie Roll to record", "Caught in the GameStop frenzy, a different GME stock goes on a wild ride", "GameStop Mania Spreads Half a World Away to Target Glove Makers", "GameStop mania spreads as far as Malaysian glove makers", "Shares of Rocket Companies, a large short target of hedge funds, jump more than 70%", "Rocket Companies stock soars 70% on speculative trading, mirroring GameStop rally", "Rocket Stock Is the New Meme Trade. Purchasing the stock to cover their short positions raises the price of the shorted stock, thus triggering more short sellers to cover their positions by buying the stock. [230] Comedian and television host Jon Stewart, after joining Twitter, expressed support for the Reddit traders in his first tweet, stating "they're joining a party Wall Street insiders have been enjoying for years". [66] However, on January 31, Robinhood announced it had removed several of these restrictions and would only limit the sale of eight securities. [167], Speaker of the House Nancy Pelosi said that Congress would also be reviewing it. I think small-time investors like that, unsophisticated investors, are going to be hurt by this. He shared information regarding his investment on r/wallstreetbets, providing regular updates on the investment's performance, including times when the investment had plunged. [60][58][61] Clearing houses include the Depository Trust & Clearing Corporation (DTCC) for equities and the Options Clearing Corporation (OCC) for options. [42] Disruptions and restrictions limiting trade have been reported on multiple brokerages such as Charles Schwab Corporation, its subsidiary TD Ameritrade, and Robinhood. Gabe Plotkin of Melvin Capital hired security after facing anti-semitic slurs and threats. [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. Toilet Paper Analogy. The stocks are all prime candidates for a short squeeze that could stick these . The practice carries an unlimited risk of losses, because there is no inherent limit to how high a stock's price can rise. [50] After the markets closed, Robinhood announced it would begin to allow "limited buys" of the affected securities starting the following day, although it was unclear what "limited buys" entailed. Short sellers are then forced to buy back the stock they had initially sold, in an effort to keep their losses from mounting. [192][193] In January 2022, a federal court ruled that investors could not pursue negligence and breach of fiduciary duty claims, citing Robinhood's customer agreement which allowed for restrictions on trading. Main article: GameStop short squeeze On January 22, 2021, users of r/wallstreetbets initiated a short squeeze on GameStop, pushing their stock prices up significantly. His investigation has extended to 13 entities, including Discord, Robinhood, the trading platforms Interactive Brokers and TD Ameritrade, and Citadel Financial. Dusaniwsky calculates that there continues to be moderate short covering in GameStop with short sellers covering 262,000 shares, worth $68 million, over the last 30 days but most of that. [30], Later analysis by a cyber security company of social media posts suggested that thousands of automated bots may have hyped GameStop stock, Dogecoin, and other stocks, on social media. His net worth, as reported by Forbes, had declined by $500 million from its peak of $2.1 billion in 2019. [116], Hedge fund manager Senvest Management, which had previously bought a five percent stake in GameStop when shares were at $10, made a profit of $700 million, exiting its position after Elon Musk tweeted "Gamestonks!". [194], A lawsuit was filed in a court in Massachusetts by securities class action firm Hagens Berman Sobol Shapiro on behalf of an investor against Keith Gill. [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. Earlier that day the share price had soared to nearly $350 (250) - 100 times more than this time . GameStop shares popped nearly 9% in extended trading on Tuesday before paring most of those gains, following a Q1 report that was worse than expected with a LPS of $2.08 on revenues that were up 8% at $1.38bn, though the company said it's still not comfortable giving guidance yet. [233] YouTuber Philip DeFranco announced he would be dropping his partnership with Robinhood, saying "Robinhood is never getting a fucking spot on my show again regardless of the offer. [249] Citadel Securities is the sister company to Citadel LLC, which along with Point72 Asset Management invested $2.75 billion into Melvin Capital. [254], During the February 18 hearing held by the House Financial Services Committee, Citadel CEO Kenneth Griffin and Robinhood CEO Vlad Tenev faced questioning regarding their relationship and denied that the limits imposed on the trading of GameStop shares had been requested by Citadel. 8 min read . Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide | Committee Repository | U.S. House of Representatives", "In GameStop Saga, Robinhood Is Cast as the Villain", "US lawmakers focus ire on Robinhood in GameStop recriminations", "Robinhood, Citadel CEOs Grilled by Lawmakers in Wake of GameStop Saga", "Congress hears testimony again on GameStop, focusing on the financial plumbing behind the frenzy", "Democrats Question Game-Like Trading Apps at House Hearing", "Robinhood customer files class action suit over GameStop trading restrictions", "Class-action lawsuit filed against Robinhood for restricting trading", "Investors are using this app to automatically join the Robinhood class-action lawsuit amid GameStop chaos", "This App Lets You Automatically Join the Robinhood Class Action Lawsuit", "Robinhood customer sues trading app over GameStop restrictions", "Robinhood Faces Anger, Class-Action Suits And Political Pushback After Curbing Trade Of GameStop", "Customers sue Robinhood Financial over stock trade suspensions", "Colorado man files federal lawsuit against Robinhood and other stock trading platforms", "Robinhood Now Faces Over 30 Class-Action Lawsuits for Blocking Stock Buys", "After GameStop stock frenzy, Tampa firms join rush to sue Robinhood trading app", "Court dismisses claims Robinhood wrongly restricted 'meme stock' trades", "SEC Urges Company Disclosures on Fundraising During Market Frenzy", "SEC Warns Companies About Stock Price Volatility Disclosures", "Sample Letter to Companies Regarding Securities Offerings During Times of Extreme Price Volatility", "Wall Street Transaction Tax Gets Fresh Look After GameStop Frenzy", "After the GameStop fiasco, momentum builds for an $800 billion tax", "GameStop Frenzy Emboldens Supporters of Stock-Trading Tax", Game Stopped: How the Meme Stock Market Event Exposed Troubling Business Practices, Inadequate Risk Management, and the Need for Regulatory and Legislative Reform, "U.S. congressional panel calls for crackdown after 'meme-stock' saga", "Robinhood Says it Will Reallow GameStop Trades", "Gotta admit it's really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino", "A leading progressive Democrat slams Robinhood's move to restrict trading on some stocks after Reddit-fueled surge", "The dramatic rise in GameStop stock price raises the question to me of whether there is any societal value to shorting stock? 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