GameStop news: Robinhood CEO to testify before Congress as GME stocks fell 30 per cent to close at $225

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Robinhood boss defends GameStop trading restrictions

The Reddit army that last week launched into an extraordinary trading war with Wall Street hedge funds over shares in failing video game retailer GameStop has switched its focus to silver, sending the price of stock in precious metal producers like First Majestic Silver and Fresnillo soaring by 35 per cent and 18 per cent respectively on Monday.

Reddit-propelled buying drove the price of the commodity up by as much as seven per cent to $29.70 an ounce at the start of the new week, its highest value since March 2013 as amateur investors looked to further exert their influence over the markets.

Vlad Tenev, under-fire CEO of trading app Robinhood, has meanwhile accused Elon Musk of “getting into conspiracy theories” after the tech entrepreneur suggested during a livestream interview that established funds and US financial regulators had conspired to rein-in purchases of GameStop shares on Tenev’s platform.

• How and why GameStop shook the stock market
• ‘It will, I fear, be the small investors who are most badly burnt’
• Will the pursuit of silver tarnish the Reddit army’s crusade?
• Why are traders bringing a class action suit against Robinhood?

Key Points

• GameStop closes 30 per cent down
• White House supports Congress on legislative reforms in wake of GameStop frenzy
• Robinhood raises additional $2.4bn to ride out GameStop frenzy
• Hedge fund Melvin Capital loses $7bn over ‘meme stock’ saga
• GameStop: The Movie already in development
• Senator calls Wall Street ‘rigged game’ and demands investigation

[1 February 2021 13:35 · Joe Sommerlad]

Ten-year-old makes $3,200 on shares mum bought for $60 two years ago

Chelsea Ritschel brings us the incredible story of primary school student Jaydyn Carr from San Antonio, Texas, whose mother gifted him GameStop shares for Kwanzaa in 2019 as a means of teaching him about finance.

[1 February 2021 14:05 · Joe Sommerlad]

Roaring Kitty speaks out: ‘This story is so much bigger than me’

Here’s my story on amateur tipster Keith Gill, a young dad from suburban Wilmington, Massachusetts, who was so influential in inspiring Redditors to rise up against the financial Goliaths.

[1 February 2021 14:30 · Joe Sommerlad]

Elon Musk vs Robinhood recap

Here’s Adam Smith on the Musk/Tenev interview I mentioned earlier.

“We just had unprecedented volume, unprecedented load on the system," insists the trading app’s CEO, explaining his company’s decision to stop allowing GameStop share trading last week.

[1 February 2021 14:50 · Joe Sommerlad]

Long shot silver

What to make of Redditors abruptly shifting their attention away from punishing hedge fund short sellers for gambling on GameStop towards investing in precious metals?

Shares in First Majestic Silver, for one, are up 35 per cent this morning while Fresnillo has seen an 18 per cent bump, according to The Wall Street Journal, as interest ramps up.

Here’s Jason Cozens - CEO of UK-based fintech company Glint, which promotes gold as an alternative currency - to give his take on what’s going on.

Consumers and retail investors are increasingly turning their backs on the established financial institutions to take control of their own finances and, in this case, hit the investment firms and financial elite where it really hurts. This movement was born out of social media and, in such a connected world, the internet has now firmly established itself as an avenue for the exchange of value. It is this unrestrained access to information and markets that will democratise money and provide consumers with viable alternative currencies such as cryptocurrencies, and, of course, gold.

For too long, the financial system has favoured the haves over the have-nots, with savers in particular punished for trusting in banks, seeing their purchasing power collapse through a potent mix of quantitative easing, rising inflation and historically low interest rates - indeed, the Bank of England has today announced effective interest rates have fallen again. 2021 could be the year when we finally see the creation of a fairer financial system; with consumers afforded unparalleled access to these alternative global currencies that are designed with consumers in mind rather than the traditional financial heavyweights.

[1 February 2021 15:10 · Joe Sommerlad]

Wall Street gears up for second bout against Reddit traders

Some of New York City’s largest hedge funds are still licking their wounds after an extraordinary week.

We’ve already heard about Melvin Capital, which lost 53 per cent of its value in January but received commitments for fresh cash from investors in the last days of the month. The company ended the month with more than $8bn in assets after having started the year with roughly $12.5bn in assets.

On Friday, Citron Research’s Andrew Left, who spent two decades building his brand as one of the world’s best-known short-sellers, turned his back on publicly detailing companies’ shortcomings, following an intense backlash against him and others who said GameStop’s stock was not worth its price.

“We saw the might of a new investor base, in terms of their ability to shape not just the fortunes of an individual stock but the fortunes of a large market segment like the Russell 2000,” said Sunil Krishnan, head of multi-asset funds at Aviva Investors.

Amid the wild price fluctuations, the amount of position-covering last week by US hedge funds, buying and selling, was the highest since the financial crisis more than a decade ago, according to analysis by Goldman Sachs. Nevertheless, their market exposure to stocks is still at near-record levels, the investment bank warned.

“This week represented the largest active hedge fund de-grossing since February 2009. Funds in their coverage sold long positions and covered shorts in every sector,” Goldman wrote in a note late on Friday.

“Despite this active deleveraging, hedge fund net and gross exposures on a mark-to-market basis both remain close to the highest levels on record, indicating ongoing risk of positioning-driven sell-offs.”

Signs are now mounting that the retail traders who moved the market last week are setting their sights further afield than just US stocks. On Thursday and Friday, the price of silver rallied, taking gains to around 10 per cent since messages began to circulate on Reddit urging retail investors to pile in and drive up prices. The price of gold has also rallied.

Such moves have brought into focus the growing heft that retail traders have on financial markets, which has long been dominated by larger institutions. 

“What’s been surprising in the last few months has been the scale of retail participation has started to move the dials,” said Paul O’Connor, head of the multi-asset team at Janus Henderson in London. “If you looked at that data a couple of months ago, you can see it’s been happening. It’s not like these guys woke up last week.”

Additional reporting by Reuters

[1 February 2021 15:30 · Joe Sommerlad]

‘Will the pursuit of silver tarnish the Reddit army’s crusade against Wall Street?’

For Indy Premium, here's James Moore with a warning to amateur investors that all that glitters is not gold.

[1 February 2021 15:50 · Joe Sommerlad]

Stocks climb in calmer trading as silver prices leap

Here’s the very latest market round-up from AP:

Stocks were modestly higher in early trading Monday, following the bumpy week that left the market with its worst weekly loss since October. Investors large and small continued to focus on GameStop, but other stocks targeted by online traders hoping to inflict damage on hedge funds were making big swings, like AMC Entertainment.

Meanwhile another target of online retail investors was the price of silver, which jumped 10 per cent to an eight-year high. The precious metal has become the latest target of online investors hoping to wage battle with Wall Street players.

The Dow Jones Industrial Average was up 0.2 per cent as of 9:55am EST (2.55pm GMT). The S&P 500 was up 0.3 per cent and the Nasdaq composite was up 0.5 per cent. Technology companies were among the biggest gainers, along with raw materials companies.

Shares of GameStop were down 3 per cent, a modest swing for the retailer that had seen double-digit moves most of the last two weeks. Trading of the retailer is still limited on trading platforms like Robinhood.

Silver rose 10 per cent to $29.70 after traders who drove up GameStop turned their attention to metals. The price is silver's highest since March 2013.

[1 February 2021 16:10 · Joe Sommerlad]

GameStop CEO silent as personal wealth soars

We still haven’t heard much from George Sherman during all of this but the veteran retail executive’s personal wealth has exploded in the last week, just two years after he joined the company and picked up a 3.4 per cent stake of 2.36m shares.

[1 February 2021 16:25 · Joe Sommerlad]

Redditor champion Elon Musk experimenting with monkey brain implants

The eccentric California tech entrepreneur is an icon to the Reddit investors and has cheered on their cause.

Anthony Cuthertson has this report on what he’s currently up to, as revealed during his discussion with Vlad Tenev yesterday.

It’s, er, very weird.

[1 February 2021 16:52 · Justin Vallejo]

Robinhood raises additional $2.4bn to ride out GameStop frenzy, reports

The app has now raised a total of $3.4bn from shareholders since Thursday, according to The Wall Street Journal.

Quoting people familiar with the matter, the Journal  reported that the company asked for more cash to cover potential losses on the sharp swings from transactions of suddenly-popular stocks like GameStop.

The company has faced heavy criticism for restricting trading of GameStop and other stocks, but the CEO has said in an interview that it was not due to liquidity issues.