“DO NOT SELL” is trending on social media after the Robinhood app restricted the purchase of heavily shorted stocks like GameStop and AMC.
In case you missed it, a group of investors on Reddit have flipped the stock market on its head by investing with a vengeance in shorted stock companies to inflate the stock price.
Many professional investors made bets that GameStop’s stock would decline even further than it already has.
In such bets, called “short sales,” investors borrow a share and sell it in hopes of buying it back later at a lower price and pocketing the difference.
GameStop is one of the most shorted stocks on Wall Street.
When the Reddit investors bumped up the price of the stock, it caused everyone who betted against the company to lose A LOT of money!
Via the Chicago Tribune:
Two investment firms that had placed bets for money-losing GameStop’s stock to fall have essentially thrown in the towel. One, Citron Research, acknowledged Wednesday in a YouTube video that it unwound the majority of its bet and took “a loss, 100%” to do so. But Andrew Left, who runs Citron, said that does not change his view that GameStop’s stock will eventually go down.
Melvin Capital is also exiting GameStop, with manager Gabe Plotkin telling CNBC that the hedge fund was taking a significant loss. He denied rumors that the hedge fund will fail. The size of the losses taken by Citron and Melvin are unknown.
GameStop stock has jumped from $18 a share to nearly $400 a share. AMC, another company that was headed to the crossroads, saw a crazy surge after going from around $3 a share to as high as $22 a share on Wednesday.
Robinhood is halting the purchase of GameStop and AMC shares which prompted investors to take to social media to encourage each other to “hold the line.”
The irony of Robinhood halting the sale of shares…
Didn’t Robin Hood steal from the rich to feed the poor?
DO NOT SELL. HOLD THE LINE.