LIVE COVERAGE | CONCLUDED
GameStop, AMC Stock Recover After Hours as Robinhood Reinstates Trading
Brokerage firms' actions this week have taken some steam out of Wall Street's hottest stocks.
Last Updated:
Jan. 29, 2021 at 5:08 PM EST
GameStop Rebounds After Hours
Shares of GameStop and AMC recovered sharply in off-hours trading, after popular online brokerage Robinhood Markets said it would reinstate trading in shares that it curbed on Thursday.
Meanwhile, the broader market is on its back foot again, with stocks in Asia and Europe off around 1% and S&P 500 futures down 1%.
There are lots of stories to catch up on that break down the latest moves as a "Nerds vs. Wall Street" battle plays out in markets. Some highlights:
Robinhood comes under pressure after restricting trading on stocks that have run up rapidly.
The man who created Reddit’s WallStreetBets isn’t who you think he is.
Is WallStreetBets alive or dead? The Reddit forum has been switched on and off in the past 24 hours, flummoxing the online trading community.
Retail trading platforms on popular brokerages struggled with outages as individual investors piled into hot stocks.
Here's a look at how the moves represent a power shift on Wall Street, as well as stories on options driving the boom, professional short sellers facing threats and a column on how the gains represent a bubble.
Regulators are watching the wild moves, too. The SEC is keeping an eye on them, as are White House officials. Sen. Elizabeth Warren (D., Mass.), meanwhile, called for stricter financial regulation and said that professional investors hurting this week have taken advantage of individuals for years.
Latest Updates
Jan. 28, 2021 at 10:05 PM
After the news that Robinhood will allow limited buying tomorrow, GameStop is up nearly 40% in after-hours trading, while AMC Entertainment adds 23%.
Clothing retailer Express is up 17%, and BlackBerry adds nearly 10%.
Jan. 28, 2021 at 9:45 PM
Citigroup said its advisers wouldn't be soliciting purchases on AMC and GameStop. (Robert Galbraith/Reuters)
Citigroup Inc. became one of the latest firms to tell its financial advisers that they could no longer recommend shares of GameStop and AMC Entertainment to clients.
Citi said its advisers wouldn't be soliciting purchases on those two stocks, though they aren’t barred from recommending the stocks be sold. Additionally, clients can trade on their own, though they can’t use margin debt to do so.
The bank also said client positions and trading volume were low in GameStop and AMC shares. Wells Fargo told its advisers Wednesday that it isn't allowing brokers to recommend that clients buy the two securities.
Other platforms used heavily by small retail traders, including Robinhood Markets and Interactive Brokers, also limited access to these and other volatile stocks.
Jan. 28, 2021 at 9:40 PM
Stocks that logged their biggest percentage declines ever on Thursday include AMC (57%), GameStop (44%), BlackBerry (42%), Bed Bath & Beyond (36%) and Nokia (28%).
Jan. 28, 2021 at 9:37 PM
Sen. Ted Cruz was one of several legislators to raise concerns about trading curbs. (Michael Reynolds/Press Pool)
Washington is typically riven by partisanship when it comes to regulating finance. But both parties appear to agree they don't like it when brokerage firms limit access for small investors.
Sen. Ted Cruz (R., Texas) tweeted Thursday that he agreed with Rep. Alexandria Ocasio-Cortez's take on Robinhood's move to restrict trading in high-flying stocks such as GameStop Corp. Some brokers have cited clearing costs tied to the extreme volatility in these stocks as the reason for curbing positions or raising margin requirements.
Ms. Ocasio-Cortez (D., N.Y.) tweeted Thursday that the House Financial Services Committee should look into the matter with "a hearing if necessary."
Sen. Sherrod Brown (D., Ohio) said he plans to hold a hearing of the Senate Banking Committee to focus on how the stock market is functioning. “People on Wall Street only care about the rules when they’re the ones getting hurt," Mr. Brown said in a statement Thursday. Mr. Brown is the incoming chairman of the banking committee.
Sen. Pat Toomey (R., Pa.), a top Republican on the banking panel, told reporters on Capitol Hill that he, too, is disturbed "that a platform would suddenly freeze out retail investors who are simply exercising their right to make a purchase." Mr. Toomey said some hot stocks are in a bubble and will probably collapse in price, but "people should be free to make the investments."
Jan. 28, 2021 at 9:33 PM
Robinhood says in a statement that starting tomorrow it will allow limited buying in hot stocks like GameStop and AMC.
It also notes the decision to restrict trading was a risk-management choice to meet "financial requirements, including SEC net capital obligations and clearinghouse deposits."
The statement notes that the decision to impose restrictions "was not made on the direction of the market makers we route to."
Some critics had speculated that market makers like Citadel Securities that receive Robinhood order flow might have influenced the company's Thursday decision.
A Citadel spokesman said in a statement that neither the company's market-making firm nor its hedge-fund business were involved with Thursday's restrictions.