Shares in GameStop Corp. and AMC Entertainment Holdings Inc. rebounded in premarket trading after Robinhood Markets Inc. removed limits on buying the two stocks, which have been at the center of the battle between Reddit-empowered retail traders and short-sellers.
Robinhood’s move, announced in an update on the trading platform’s support page, comes a day after it increased limits on purchases of the two stocks. GameStop has plunged 84% so far this week while AMC has tumbled 47% as retail traders flocked to other corners of the stock market, such as small drug developers.
Both shares rose in premarket trading on Friday, with GameStop up 9.8% and AMC up 5.6% at 8.26 am in New York. The stocks skyrocketed in late January as day traders that populate Reddit’s WallStreetBets forum sought to fend off short-sellers.
Robinhood’s temporary restrictions on the Reddit group’s favourite stocks last week triggered an outcry among retail traders who said the brokerage had sided with hedge funds and institutional money. In order to shore up its capital amid the trading frenzy, the trading app operator has had to borrow or raise billions of dollars.
Trading in other Reddit-favored names were mixed before Friday’s stock-market open with cannabis company Sundial Growers Inc. and Naked Brand Group Ltd. each rising 1.7%. Koss Corp., Express Inc., and Ezgo Technologies were among other “meme stocks” that gained in early trading. Zomedica Corp. fell 7%.
Vlad Tenev, the chief executive officer of Robinhood, said in an opinion piece on USA Today this week that the firm built the trading app to serve the millions of people left behind by the US financial system
The short-term curbs haven’t damaged the popularity of the no-fee app, founded in 2013. It was downloaded more than 600,000 times last Friday alone, according to research from SimilarWeb and JMP Securities LLC.
GameStop has plummeted 89% since hitting a record intraday peak of US$483 ($644) last week, reducing its market value by about US$30 billion to US$3.7 billion. The stock is still up 184% this year.
