GameStop, AMC gain after Robinhood lifts trading curbs

Both shares rose in premarket trading on Friday, with GameStop up 14% and AMC up 8.9%

FILE PHOTO: A person walks past a GameStop store in the Manhattan borough of New York City, New York, U.S., January 29, 2021. REUTERS/Carlo Allegri/File Photo/File Photo
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Shares in GameStop and AMC Entertainment rebounded slightly in premarket trading after Robinhood removed limits on buying the two stocks, which have been at the centre of the battle between Reddit-empowered retail traders and short-sellers.

Robinhood’s move, announced in an update on the trading platform’s support page, comes a day after it increased limits on purchases of the two stocks. GameStop has plunged 84 per cent so far this week while AMC has tumbled 47 per cent as retail traders flocked to other corners of the stock market, such as small drug developers.

Both shares rose in premarket trading on Friday, with GameStop up 14 per cent and AMC up 8.9 per cent at 5:30am in New York. The stocks skyrocketed in late January as day traders that populate Reddit’s WallStreetBets forum sought to fend off short-sellers.

Robinhood’s temporary restrictions on the Reddit group’s favourite stocks last week triggered an outcry among retail traders who said the brokerage had sided with hedge funds and institutional money. In order to shore up its capital amid the trading frenzy, the trading app operator has had to borrow or raise billions of dollars.

Vlad Tenev, the chief executive of Robinhood, said in an opinion piece on USA Today this week that the firm built the trading app to serve the millions of people left behind by the US financial system -- not hedge funds.

The short-term curbs haven’t damaged the popularity of the no-fee app, founded in 2013. It was downloaded more than 600,000 times last Friday alone, according to research from SimilarWeb and JMP Securities.

GameStop has plummeted 89 per cent since hitting a record intraday peak of $483 last week, reducing its market value by about $30 billion to $3.7bn. The stock is still up 184 per cent this year.