{"id":105863,"date":"2021-01-29T22:26:47","date_gmt":"2021-01-29T22:26:47","guid":{"rendered":"https:\/\/fin2me.com\/?p=105863"},"modified":"2021-01-29T22:26:47","modified_gmt":"2021-01-29T22:26:47","slug":"robinhood-ceo-speaks-to-cuomo-after-gamestop-stock-chaos","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/robinhood-ceo-speaks-to-cuomo-after-gamestop-stock-chaos\/","title":{"rendered":"Robinhood CEO speaks to Cuomo after GameStop stock chaos"},"content":{"rendered":"<p><cite>New York (CNN Business)<\/cite>It has been a turbulent week on Wall Street. <\/p>\n<p><span>GameStop<\/span> <span>(<span>GME<\/span>)<\/span> has been at the center of it, again soaring on Friday and ending the day up nearly 68%, after trading platforms including Robinhood lifted restrictions on trading the stock. The stock ended the week up 400%.<br \/>\nBut elsewhere on Wall Street, the picture was bleak. <\/p>\n<ul><\/ul>\n<p>It was the last trading day of January and the <span>Dow<\/span> <span>(<span>INDU<\/span>)<\/span> and the broader <span>S&amp;P 500<\/span> <span>(<span>SPX<\/span>)<\/span> logged their worst month since October.<br \/>\nFor the day, the Dow finished 2%, or 621 points, lower, and the S&amp;P ended down down 1.9%. The <span>Nasdaq Composite<\/span> <span>(<span>COMP<\/span>)<\/span> fell 2%.<\/p>\n<p>It&#8217;s been a messy week for the three benchmarks, including all-time highs for the S&amp;P and Nasdaq on Monday, which was also the worst day since October for the Dow.<br \/>\nGameStop is not listed on those indexes. But it is a constituent of the <span>Russell 2000<\/span> <span>(<span>RUT<\/span>)<\/span> index, which includes only smaller stocks. On Thursday, the video game retailer became the index&#8217;s largest company by market capitalization for the first time. Still, the Russell closed down more than 1%.<br \/>\nGameStop became the hottest stock in the market out of nowhere this week after retail investors chatting on Reddit pushed its price up, orchestrating a massive short-squeeze. This means investors who were shorting the stock &#8212; betting that its value would go down &#8212; were caught in a pickle when the stock suddenly skyrocketed.<br \/>\nOther companies, including cinema chain <span>AMC<\/span> <span>(<span>AMC<\/span>)<\/span>, got in on the action too: Its shares ended Friday up nearly 54%.<br \/>\nTrading platforms and brokers faced outages on multiple occasions this week and placed restrictions on trading many of the &#8220;Reddit stocks.&#8221; Some of them, most notably Robinhood, have since reversed that decision.<\/p>\n<h3>What does it all mean for the market?<\/h3>\n<p>It might be a while until the full effect of this Reddit bonanza will be clear. But one thing is for sure: The Pandora&#8217;s box of social media investing has been opened and we won&#8217;t be able to close it again, Sam Stovall, US equity strategist at CFRA Research, told CNN Business.<br \/>\nIt&#8217;s not GameStop itself that matters in this scenario &#8212; it&#8217;s more about how the company&#8217;s stock rally exposed flaws in the system, said Brad McMillan, chief investment officer at Commonwealth Financial Network.<br \/>\n&#8220;One of the things i think was revealed was a mispricing of call options. I think you&#8217;re going to see their price go up to reflect this,&#8221; he told CNN Business.<br \/>\nCall options give investors the right to buy stocks at a predetermined price in a specific window of time in future.<br \/>\nThe surge in GameStop and other struggling companies triggered a worry that the retail buying spree could lead to a collapse of the hedge funds shorting those stocks, Stovall said. Suddenly that worry is systemic.<br \/>\nEarlier this week, Citadel, the massive hedge fund owned by Ken Griffin, provided a $2 billion bailout to GameStop shortseller Melvin Capital Management after it was caught on the wrong end of the stock move.<br \/>\n&#8220;Today is the margin day, so companies have to put up what they owe,&#8221; Stovall said. Margin debt, the money investors can borrow to fund their purchases, has gone up very substantially in the last month, McMillan said.<\/p>\n<h3>In other news&#8230;<\/h3>\n<p>More than just the GameStop-mania has got the market down Friday.<\/p>\n<ul><\/ul>\n<p>&#8220;We entered this final week of January rife for a setback,&#8221; Stovall said.<br \/>\nDelays in vaccine distribution, ongoing political discord that could be a hurdle to the Biden administration&#8217;s proposed $1.9 trillion stimulus package and earnings season also had investors on their toes.<br \/>\nSource: <a href=\"https:\/\/edition.cnn.com\/2021\/01\/29\/investing\/dow-gamestop-stock-market-today\/index.html\" target=\"_blank\" rel=\"noopener noreferrer\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>New York (CNN Business)It has been a turbulent week on Wall Street. GameStop (GME) has been at the center of it, again soaring on Friday [&#8230;]<\/p>\n","protected":false},"author":3,"featured_media":105862,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Robinhood CEO speaks to Cuomo after GameStop stock chaos - Fin2me<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fin2me.com\/markets\/robinhood-ceo-speaks-to-cuomo-after-gamestop-stock-chaos\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Robinhood CEO speaks to Cuomo after GameStop stock chaos - Fin2me\" \/>\n<meta property=\"og:description\" content=\"New York (CNN Business)It has been a turbulent week on Wall Street. 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