Along with GameStop, Reddit additionally trades craters – AMC, silver get huge hits
In addition to GameStop, other popular short squeeze targets made huge hits among Reddit merchants on Tuesday.
AMC Entertainment’s shares, which rose nearly 300% last week due to a large short squeeze, fell around 39% in morning trading. The iShares Silver Trust ETF, which was part of an attempted push on the metal, was down 7%.
Reddit trades are starting to relax
On other heavily shortened names that rebounded last week, BlackBerry fell 19%, Express 34%, Koss 33%, Naked Brand 35% and Nokia 7% in the morning. Genius Brands was down 3%.
Many of the names hit their lows during the session after Robinhood announced it would ease trade restrictions.
Short selling is a strategy in which investors borrow shares of a stock at a certain price, with the expectation that the market value will drop below that level when it is time to pay for the borrowed shares. This strategy is often used by hedge funds.
Amid last week’s retail investment frenzy in heavily shortened names, Reddit retailers pushed GameStop, AMC Entertainment, Koss and others up and pushed hedge funds that were shortening the names. These stocks return to earth this week as Robinhood and other trading apps continue to restrict purchases of stocks and options contracts and squeeze trading loses momentum.
Square’s Cash app, which grabbed some frustrated Robinhood customers last week, just announced that clearing broker Axos is stopping purchases from AMC Entertainment and Nokia.
GameStop’s shares fell more than 60% on Tuesday.
Currently, Robinhood customers can only buy 100 shares of GameStop and 1,250 shares of AMC Entertainment. However, if Robinhood customers own more than the share limit, they will not be able to buy shares.
Robinhood and other brokers are required to meet certain deposit requirements from trade clearing houses. Due to the high volume of trading, Robinhood said last week it had to impose the restrictions as the deposit requirements set by the clearinghouse were much higher than expected.
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