GameStop stocks rose at high speeds, causing restrictions for buyers

Ava Riach, News Assistant Editor

GameStop’s stocks rose at a rapid rate with the help of Reddit users, forcing halts in 

trading beginning late January 2021. Traders used a Reddit forum named r/WallStreetBets and were able to inflate the price of the company from around $20 per share to almost $500 per share. The forum is used to converse about stocks, buying and selling. 

People became interested in GameStop due to hedge funds. The Motley Fool describes hedge funds as “an investment company that invests its clients’ money in alternative investments to either beat the market or provide a hedge against unforeseen market changes,” short-selling the stock. 

Robinhood, a trading app used to (buy/sell) stocks, ended up cutting off the sales of the stocks because of the amount of inflation that was occurring. This caused a lot of outrage from the public towards the company. 

A Reddit user said, “We don’t have billionaires to bail us out when we mess up our portfolio risk and a position goes against us. We can’t go on TV and make attempts to manipulate millions to take our side of the trade. If we mess up as bad as they did, we’re wiped out,” according to Vox. 

“It’s a captivating David vs. Goliath story, where David — at least on some fronts — appears to be winning,” said Vox writer Emily Stewart.

Robinhood ended up removing their price restrictions on certain stocks such as Gamestop early February, with shares for GameStop increasing up to 78%. Along with GameStop, AMC Entertainment increased by 17%. GameStop shares had a high of $483 within one day, occurring Jan. 28. AMC reached a high of $20.36 within one day, occurring Jan. 27 according to Markets Insider.

Stocks, also known as equities, give stockholders a share of a company to own. People buy stocks for many reasons, such as capital appreciation, dividend payments and the ability to “vote shares and influence the company,” according to the U.S. Securities and Exchange Commission. 

There are two main kinds of stocks: common stock and preferred stock. Common stock allows owners to have input on the company, while preferred stock do not have as much input on the company and has first priority on the earnings.

Stocks can be bought and sold from “a direct stock plan, a dividend reinvestment plan, a discount or full-service broker or a stock funny,” according to the U.S. Securities and Exchange Commission. 

Since this situation ended, GameStop’s stocks decreased to below $40 by Feb. 19, causing significant losses for investors. GameStop’s share price currently does not have much support, and it is predicted that the trading will only end in losses, making people stay away from investing in the company any time soon. 

“High school students should learn about stocks. I only learned about stocks from my parents, friends and mostly by me looking it up online. I wish schools would’ve said hey this is something that even high school students could do, because I think a lot more people would get into it and it is a way to possibly make some more money,” said Joey Bridgham, senior.  

A display of stocks and statistics on a laptop. (Photos by Image by StockSnap from Pixabay)