The Reddit rally is back.
GameStop’s stock price exploded once again Friday after the Robinhood app eased restrictions on trading that outraged rookie investors.
The video-game retailer’s shares surged 101 percent in premarket trading to $389.50 as of 6:27 a.m. as traders on Reddit’s “WallStreetBets” forum continued to talk it up as their golden goose.
That put the stock on pace to more than recoup the 44 percent drop it suffered Thursday as Robinhood barred investors from buying shares of GameStop and other companies that have been pumped up by the 5.8 million-member message board.
Robinhood later reversed course, saying it would let traders buy and hold limited numbers of those stocks on Friday. The company placed the tightest limits on GameStop — users can only purchase five shares or 10 options contracts.
That didn’t stop WallStreetBets traders from saying they would push the company’s share price up to $1,000 or even $5,000. They urged each other to hold onto the stock through the market turmoil.
“There will be dips today. Expect them,” WallStreetBets user yvngpillow wrote early Friday. “The rich are freaking out and they’re going to do whatever they can to try and save their own asses. They basically have immunity. WE JUST HAVE TO HOLD.”
The fast-growing forum has been the launching pad for a populist insurrection in the stock market. Reddit traders have pushed up stocks that institutional investors have shorted, or bet against. Those bets have led to hefty losses as the share prices soared.
On Tuesday, GameStop’s stock price rocketed up over 90%, sending shock waves through the entire stock market and the broader world of finance.
But the company, which has been hurt badly during the pandemic and was struggling long before COVID-19, did not suddenly change its business model or win the lottery. Individual investors in online groups, mostly on the social media site Reddit, rallied to buy GameStop shares in an enormous spree. In their view, they were attempting to combat wealthy hedge funds that had “shorted” GameStop’s shares, essentially betting big on the retail chain’s continued decline.
By driving up the foundering company’s prices, against all expectations, some major hedge funds lost huge sums and were forced to sell their GameStop shares at a loss, and some individual investors made a windfall.
Other WallStreetBets darlings also continued to surge Friday. Movie theater chain AMC Entertainment surged 54 percent in early trading to $13.30 after a nearly 57 percent loss Thursday. Former smartphone maker BlackBerry was recently up nearly 16 percent, while Nokia climbed about 6 percent and American Airlines spiked 13 percent.