By Yasin Ebrahim
Investing.com – GameStop, AMC, Nokia (NYSE:NOK) and a slew of other so-called meme stocks backed by retail investors jumped in after-hours trade Thursday, after online trading platform Robinhood said it would lift some trading restrictions on the stocks.
GameStop (NYSE:GME) rose 31% to $259 in after-hours trade after closing down 43%. AMC Entertainment (NYSE:AMC) rose 21% to $10.56 after falling 56% on the day. Nokia ended the day down 13.25%, Naked Brand Group Ltd (NASDAQ:NAKD) rose 6% in after-hours trade, while Express (NYSE:EXPR) was up 11% and Blackberry (TSX:BB) climbed 8%.
“Starting tomorrow, we plan to allow limited buys of these securities. We’ll continue to monitor the situation and may make adjustments as needed,” Robinhood said in a statement.
The battle between the short-sellers and the Redditors has intensified in recent days and captivated attention worldwide. But it's not just the "little guy" or retail investor that has been riding the wave of momentum.
GameStop disclosed in a filing with regulators on Thursday that MUST Asset Management, a large shareholder in the company, has sold its entire stake in the company.
The move comes just a day ahead of what will be another wild session of trading. Short options - bets against the price of a stock - are widely expected to expire, forcing another squeeze on the short-sellers that could see them potentially lose billions of dollars.
Earlier in the day, Robinhood and other online brokerages restricted trading in the cohort of "meme stocks," and hiked margins requirements, citing increased volatility.
The move drew ire from retail investors, who filed at least two federal suits demanding it reinstate trading of shares including GameStop, BlackBerry (NYSE:BB) Ltd., Nokia Oyj (HE:NOKIA) and AMC Entertainment Holdings Inc, Bloomberg reported.
Lawmakers on both sides of the political aisle have also chimed in on action, questioning why brokerages had imposed trading restrictions.
Texas Republican Senator Ted Cruz also backed calls for a probe into Robinhood's decision to block retail investors.
As it stands, the Redditors have already drawn proverbial blood against Melvin Capital, with the latter reportedly closing out its short position on GameStop for huge losses earlier this week.
The stage has been set for another wild day of trading on Friday. The Redditors appear determined to "hold the line," a mantra littered throughout Reddit forum "wallstreetbets," seemingly symbolizing a battle cry to fellow holders to avoid selling their positions and caving into pressure.
For all the hoopla surrounding the short-squeeze, there is however the risk that the "little guy" could end up losing a lot more than the wealthier and experienced purveyors of Wall Street.