GameStop’s fall continues regardless of easing of dealer restrictions, down 30% right this moment and 80% on the week
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GameStop’s stock is tanking again on Thursday, as the Reddit-fueled trade continues to unravel.
Shares of GameStop are down more than 30% on Thursday, brining the brick-and-mortar video game retailer’s weekly losses to more than 80%.
The drop in price comes despite the rollback of trading limits from stock trading app Robinhood.
Last week, GameStop experienced a meteoric rise in a major short squeeze orchestrated by Reddit users. Point-and-click investors piled into the name, driving its share price up 400%, while hedge funds rushed to cover their losses from shorting the stock.
Short selling is a strategy in which investors borrow shares of a stock at a certain price on expectations that the market value will fall below that level when it’s time to buy back the borrowed shares they have sold.
Millennial-favored trading app Robinhood, which started restricting trading of a handful of stocks last week amid an increase in capital requirements from the Depository Trust & Clearing Corporation, now allows its clients to purchase up to 500 shares of GameStop. Earlier this week, clients could only buy one share of the company.
However, investors who own more than 500 shares of GameStop can’t buy one more share of the stock.
The only other stock that Robinhood is restricting is AMC Entertainment. Customers can buy up to 5,500 shares of the movie theater operator.
Regulators in Washington are looking into the GameStop trading mania that occurred last week. Treasury Secretary Janet Yellen said she will be meeting with the heads of the Securities and Exchange Commission, the Federal Reserve board, the New York Fed and the Commodities Futures Trading Commission to discuss “whether recent activities are consistent with investor protection and fair and efficient markets.”
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