GameStop Plummets 60%... "Robinhood Killed It" (Summary)

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The GameStop stock, which had heated up the US stock market, has been on a downward trend for two consecutive days. A famous day trader who had bought GameStop also confessed to cutting losses after suffering a big loss.

As of 3:30 PM on the 2nd (local time), GameStop was trading at $95, down 58% on the New York Stock Exchange. During the session, it even plunged to $74.

GameStop's stock price fell an additional 30% from the previous day, dropping 71% over two days. GameStop had surged to $480 during the trading session last week.

In options trading, which helped drive up the stock price, media reports in the US indicate that GameStop sell trades are noticeably increasing. Along with spot stock buying, call option purchases had been driving GameStop's stock price.

CNBC reported, "It seems that hedge funds that had shorted the stock as well as general investors have started selling GameStop shares, causing the stock price to fall."

The interest rate on GameStop stock lending, which once reached several tens of percent, has also dropped to about 10%. This is interpreted as short sellers massively closing their positions. According to S3 Partners, the short interest ratio relative to GameStop's float has halved from 110% a week ago to 53%.

The stock price of AMC, which surged along with GameStop, also fell about 40%. Stocks such as BlackBerry and Bed Bath & Beyond, which also attracted individual investors, are all weak.

Silver, which had emerged as a new investment target instead of GameStop, plunged 9.41% after rising 8% the previous day. The strong dollar is also seen as a factor that contributed to the decline in silver prices.

As the stock price plummeted, individual investors' losses are also increasing. Dave Portnoy, a famous day trader who actively invested in GameStop and AMC, revealed on the Reddit investment community 'WallStreetBets' that he sold all the stocks mentioned there and suffered a loss of $700,000.

Through a tweet, he blamed the stock trading app Robinhood, which restricted GameStop stock purchases, saying "Robinhood killed the 'Reddit rally.'"

He claimed, "Robinhood and its CEO took money from me and should go to jail."