GameStop’s remarkable Wall Street run took a bad turn on Tuesday morning, with the video game retailer seeing its share price drop 36% about two hours into trading. The plunge pushed GameStop’s share price down to about $144 per share, a day after closing at $225 per share.
The retailer was at the center of a frenzy last week, when its share price zoomed from below $40 per share to nearly $350 per share last Wednesday. GameStop’s rally was spurred on in large part by the support of Wall Street Bets, a popular Reddit forum, which has championed the stock in recent months due to management changes. Another selling point? GameStop’s stock was abnormally shorted, or bet against, by hedge funds — a fact that appealed to many WSB-inspired investors looking to stick it to Wall Street and drive the price higher.
GameStop’s meteoric rise stalled last Thursday, though, when Robinhood, the stock trading app, barred users from buying GameStop shares and other so-called “meme stocks” like AMC and BlackBerry. Robinhood’s decision infuriated many of its users, who were only given the option to sell their GameStop shares; the app restored “limited” GameStop purchasing on Friday, after raising $1 billion in emergency funding. (Robinhood raised an additional $2.4 billion on Monday.)
Robinhood CEO Vlad Tenev, in an interview with CNBC last Thursday, said the app restricted trading “in order to protect the firm and protect our customers.” That explanation did little to satiate GameStop and AMC shareholders, though, who were irate that the app had curtailed trading; the phrase “F- Robinhood” quickly gained traction on Wall Street Bets in the aftermath, with GameStop shareholders saying Robinhood gave short sellers a chance to cover their positions while trading was blocked.
Despite the blowback, Robinhood still had a huge week in terms of app downloads last week, with 2.1 million people downloading the app between January 25 and January 31 — an increase of 394% week-over-week — according to data shared from Sensor Tower. Other trading apps enjoyed a surge in new downloads, too, with Cash App increasing 32% week-over-week to 850,000 downloads, Schwab increasing 339% to 123,000 downloads, and SoFi increasing 900% to 200,000 downloads, per Sensor Tower.
Despite the big drop, Wall Street Bets was still full of users imploring others to hold their GameStop shares on Tuesday. “Down $60K and I’m holding,” one user posted.