GameStop shares surge after Robinhood eases trading restrictions
GameStop shares are surging again ahead of U.S. markets opening on Friday as online brokerage Robinhood eases restrictions on the purchase of certain shares. Robinhood had been faced with threats of a boycott from some Reddit users at the Wallstreetbets forum, who had bid up GameStop's shares prior to the trading ban.
In a message to customers, Robinhood said, "It's been a tough day," and added that it was reversing its decision to ban trading in GameStop and other stocks that had gained the attention of Wallstreetbets users. "Starting [Friday], we plan to allow limited buys of these securities," the company said in the message. "We'll continue to monitor the situation and may make adjustments as needed."
As broader financial markets were sliding, GameStop shares jumped $143, or 74%, to $339 per share in early trade. Along with GameStop's stock, Robinhood capped share purchases in AMC, American Airlines, BlackBerry, Koss and other companies whipsawed by market volatility.
The frenzy surrounding GameStop and Reddit-inspired traders has drawn the scrutiny of lawmakers and business experts alike. Many took issue with Robinhood's trading limits, uniting people who usually hold conflicting views, such as Senator Ted Cruz, a Republican, and Rep. Alexandria Ocasio-Cortez, a Democrat.
"Robinhood could have changed the rules, but a complete restriction on trading was wrong and that is why we are seeing AOC and Ted Cruz on the same side of that argument," noted Edward Moya, senior market analyst at OANDA, in a Friday research note.
Already, the turmoil has sparked at least one lawsuit, with Rosen Law Firm saying on Thursday that it is "investigating potential securities claims on behalf of those who lost money" using Robinhood "resulting from allegations that Robinhood may have engaged in illegal market manipulation."