Will GME’s Price Drop Spark Another Buying Spree?
The hectic GME stock has taken a huge hit recently—possibly due to major brokerages including Robinhood restricting trading. However, this dip in the price gives Reddit investors an opportunity to buy cheap once again, and might spark a new buying spree.
A few days ago, Robinhood’s trading platform—previously hailed as a leading stock app—was thrown on the receiving end as millions of people called out the platform for what they claimed to be its effort to cushion big-money Wall Street dealers from losses. This came after Robinhood suspended the trading of select stocks that appeared to have big-money hedge funds in distress after they made a wrong call to short GameStop (GME).
The bad times for hedge funds began when millions of WallStreetBets members on Reddit took matters into their own hands to bet against the hedge funds. The hedge funds are estimated to have lost over $5 billion in the process.
Robinhood Tries to Save Face
Many reports have surfaced claiming Google deleted over 100,000 negative reviews of Robinhood. While the activity has supposedly stopped, concerns remain that the damage to Robinhood’s brand is done.
Now, Robinhood seems to be making efforts to clear its name and reduce the backlash caused after it fell out of favor with the common public. The platform has lifted the restrictions and opened up the system for trading GME and other affected stocks like AMC, Nokia, and Express Inc. The company has also attempted to explain the situation to save its face.
According to Robinhood’s CEO, the suspension of trading of GME and others was a difficult decision to make. It ultimately came as a result of increased trading that led to a huge increase in the deposits required by the clearing house to complete the transactions.
Clearinghouses are now being blamed for their slow processing speed, with some people already advocating for a better and faster way of clearing trades. The clearing house is controlled by the US SEC with the help of the Depository Trust and Clearing Corporation.
It takes two days for clearing firms to close a trade. Time is a crucial component in the functionality of the stock market—and current processes appear to be obsolete.
Will Wallstreetbets Buy More GME?
Despite the GME price taking a dip, fans on WSB are still unfazed. They see the price dip as a new ripe opportunity to accumulate GME stocks and capitalize on future price spikes. The current GME price seems to be flattening out, with the current value hovering at around $50.
People who had their accounts frozen by Robinhood now have access to their funds, meaning that they can use the profits they gained when the price spiked to buy the dip. At one point last week, the GME price had shot up close to $400. With the price now swinging over the $60 range, it’s very possible that these traders will want to buy more. The community is already abuzz with optimism.
Also, the current dip means that traders who are still in the market could use the opportunity to accumulate more and considerably reduce the cost per stock in their investment.
With Restrictions Lifted, Momentum Could Gain
Following these latest developments, many have fronted the idea that this might well be the second great opportunity to buy GME, coupled with strong notions of a serious price rally in the coming days. In that case, the lifting of trading restrictions by Robinhood could signal the next bull run as people rush to buy.
This would create a state of FOMO (Fear Of Missing Out) within the GME stock market and ultimately drive up the price as demand increases.
Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.
