GameStop Stock, Reddit and Robinhood: What You Need to Know – WSJ

The stock of videogame retailer GameStop started 2021 at $18.84. On Friday, its share price traded above $340. And it isn’t the only surprising stock seeing big gains. Below, we catch you up on the latest developments in the GameStop stock market mania.

What is happening with GameStop, AMC and some other stocks?

Amateur investors, a rising force in the markets, flexed their collective trading muscles this week, sending seemingly unremarkable company stocks to new highs. The investors have cheered one another on through social media forums like Reddit’s WallStreetBets to buy stock and options in videogame retailer GameStop, movie theater company AMC Entertainment Holdings and others.

As the stocks skyrocketed, some day traders profited and some hedge funds with short bets against the companies suffered losses. This dynamic created a short squeeze, where heavy stock buying forces short bettors to buy shares of the stocks to limit their losses, therefore increasing the stock price even more.

As small investors continued to buy up more shares on Thursday, mobile trading app Robinhood and several other brokerages restricted access to stocks popular with those traders. The traders were left with the choice of holding their stocks or selling them. Small investors were furious with the brokerages. GameStop and AMC stocks sank in response to the restrictions.

Robinhood Markets Inc. opened up trading again early Friday for shares and options, and GameStop and AMC stock prices soared again.

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