GameStop shares skyrocketed as much as 114% on Friday after Robinhood said it would loosen restrictions on buying the stock on its platform. The video-game retailer’s stock has surged as much as 2,000% month-to-date.
The key driver has been day traders gathering in Wall Street Bets and other online forums to organize mass purchases of heavily shorted stocks including GameStop, AMC, and BlackBerry.
Their goal has been to score quick profits and heap pressure on short-sellers, forcing them to buy shares to cover their positions and send the stock even higher. They have targeted Citron Research, Melvin Capital, Point72, and other hedge funds in recent days.
The frenzy has divided influential figures in the investment community. Tesla CEO Elon Musk tweeted “GameStonk!!,” while venture capitalist Chris Sacca cheered the day traders on, but warned them not to load up on debt.
“Shark Tank” star Mark Cuban said he “loves” what’s happening, and his 11-year-old son has cashed in on the craze. Social Capital boss Chamath Palihapitiya was egged on to buy GameStop calls and has pledged to donate his profits to the Barstool Fund, which supports small businesses.
However, Michael Burry of “The Big Short” fame – who laid the groundwork for the GameStop frenzy when he bought a stake in 2019 – has cautioned day traders not to get so enthralled with a stock that they own it out of blind faith.
Billionaire investor Leon Cooperman also decried retail investors for “attacking” the rich on Thursday, and said the rampant speculation would “end very badly for the public.”