Finance

GameStop Trading Halted After Reddit-Fueled Price Explosion

Michael Ginsberg General Assignment Reporter
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Wall Street regulators briefly halted stock trades of video game retailer GameStop after the company’s stock price rose over 50% Monday morning.

The stock opened at $96.73 and reached a high of $149.68, according to Yahoo! Finance. Trading was stopped for about eight minutes from 9:34 to 9:42.

Trading curbs were first introduced after the Black Monday crash on Oct. 19, 1987, according to Investopedia. Regulators use them to give “participants time to think about how they want to respond to large and unexpected movements” in the market.

The rise in the company’s stock price was primarily driven by Reddit users in the group r/wallstreetbets issuing massive numbers of buys, according to Vice.

Wall Street brokers expressed concern with the stock’s volatility. “This stock has completely disconnected from the fundamentals. This is very much being driven by retail investors, individual investors, many of them trading on Robinhood, many of them trading on options,” analyst Anthony Chukumba told CNBC.

Apps like Robinhood, which allow users to day trade without fees, have become extremely popular in the last year. At the beginning of the COVID-19 pandemic, Robinhood users accounted for over 50% of new brokerage accounts, according to its CEO Vlad Tenev.

William and Mary economics professor Peter Atwater expressed disdain for the type of investing that pushes stocks like GameStop’s through the roof. “They’re not even trying to mask this as investing. This is pure gambling,” he said in an interview with The Dispatch.

Investors engaged in more than 86 million GameStop transactions on Jan. 25, CNBC reported. The stock’s 30 day average trading volume was previously 29.8 million shares.