Over the past few weeks retailer, GameStop stock has skyrocketed, fell and is on the rise again.
Between February 2018 and February 2020 the number of GameStop storefronts decreased by almost 1800 stores due to the increase in digital game buying, which ultimately led to a 138% shortage in GME stocks.
In 2020, GameStop stocks were as low as three dollars and looked to be on their way to bankruptcy similar to Blockbuster, which was a movie rental corporation before Netflix.
As 2021 began GME stock rose to about $17 to $35 before peaking around $350 on January 27 after closing at $150 the night before on January 26.
The surge in price was partially fueled by Elon Musk tweeting about GameStop and various Reddit and Discord servers flooding investments into GME stocks.
— Elon Musk (@elonmusk) January 26, 2021
The overnight phenomenon of GME stocks caused a shift to other struggling corporations such as AMC, Blackberry, Nokia and even cryptocurrency DogeCoin to be on the rise. Despite not having the equal amount of payback revenue as GME stocks, hashtags such as “#dogecointothemoon” and “amctothemoon” have a combined 12.8 million videos on TikTok.
On the other hand, due to the inflation of investments for corporations such as GameStop and AMC and almost 50 others, popular free trading apps across Reddit and TikTok, Robinhood and TD Ameritrade blocked new investments on January 28 following the first peak.
Following the ban on investments, the price of GME stock fell over $150 on January 28 closing and peaked at $325 on the following day after the corporations were unbanned.
Why does this matter?
First and foremost the movement of small investors banding together to “eat the rich” created historical numbers with the number of people investing and the inflation of the social media stock.
Vlad Tenev, the CEO of Robinhood claimed the halt on trading certain stocks, (which were all trending amongst small investors) was done to protect them, despite withdrawing $1.5 billion in emergency funding.
We’ve received questions about Robinhood and the mechanics behind your trades. https://t.co/fuGCgDZZli pic.twitter.com/JYTTbOK7rf
— Robinhood (@RobinhoodApp) January 30, 2021
Although, some corporations such as General Motors (GM) were also limited in the number of shares to be purchased on Robinhood for a short period. GM has quietly been on the rise in 2021 after announcing to begin electric vehicle production this year in their three major production plants.
There’s no guarantee that GM will skyrocket in value such as Tesla has but the possibility is there as President Biden favors the plan to have 90 percent of the vehicles on the road be electric.
Overall, GM is an example to question investing apps such as Robinhood’s motive to temporarily shut down buying for select investors. The situation could be the beginning of an increased number of investors as currently 90 percent of stocks are held by those in the top 10 percent of people based on yearly income according to Forbes.
Featured Image Citation: “GameStop” by Mike Mozart is licensed under Creative Commons Attribution-No changes were made to the image. Use of this photo does not indicate photographer endorsement of this article.