GameStop falls 35% extra regardless of loosening dealer restrictions
Jakub Porzycki / NurPhoto via Getty Images
GameStop shares refueled on Thursday as the Reddit-powered trade continued to break up.
The stock traded more than 35% lower, bringing the video game retailer’s weekly losses to over 80%.
The most recent drop in price even came after the trading app Robinhood reset some of its trading limits on the stock.
GameStop saw a meteoric surge in a large red squeeze orchestrated by Reddit users last week. Point-and-click investors piled in the names, adding 400% to the stock’s price, while hedge funds covered their losses from shorting the stock.
Short selling is a strategy whereby investors borrow shares of a stock at a certain price, with the market value expected to fall below that level when it comes time to buy back the borrowed shares they sold.
Millennial favorite trading app Robinhood, which restricted trading in a handful of shares last week due to the increase in capital requirements of the Depository Trust & Clearing Corporation, now allows customers to purchase up to 500 GameStop shares. Earlier this week, customers could only buy one share of the company.
However, investors who own more than 500 shares cannot buy additional shares.
The only other stock holding down Robinhood is AMC Entertainment. Customers cannot buy shares in the cinema operator if they own 5,500 shares.
Washington regulators are investigating the GameStop trafficking craze. Treasury Secretary Janet Yellen said Tuesday she would meet with heads of the Securities and Exchange Commission, the Commodities Futures Trading Commission and officials from the Federal Reserve to discuss “whether recent activities are consistent with investor protection and fair and efficient markets “.
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