GameStop shares fell as much as 34% and were briefly halted on Monday as the Reddit-fueled frenetic trading extended into February.
Shares of the bricks-and-mortar video game retailer last traded down 20% on Monday. GameStop jumped as much as 18% to $384.89 in premarket trading.
The stock surged 1,625% in January as point-and-click investors piled into the name while hedge funds rushed to cover their losses from shorting the stock.
The astronomical rally has inflicted a mark-to-market loss of almost $20 billion to hedge funds with short positions against the stock, according to data from S3 Partners. However, many short sellers are holding onto their bearish positions.
Robinhood and other trading apps continue to limit buying of GameStop stocks and options contracts, along with those of other heavily shorted names, following a week of hugely volatile trading due to a retail trading frenzy led by 5 million-strong Reddit thread “WallStreetBets.” Currently, Robinhood only allows clients to buy four shares of GameStop, unless they already own shares four, in which case the client can’t buy any shares. Robinhood eased the restrictions on Monday before announcing another $2.4 billion cash injection.
Limitations are also in place for AMC Entertainment, BlackBerry, Koss, Express, Nokia, Genius Brands International and Naked Brand Group.
Most of the other restricted names were lower on Monday, including BlackBerry, which lost 3%, Express, which is down 20%, Koss, which dropped 35%, and Naked Brand Group, which fell 10%.
AMC Entertainment, Genius Brands and Nokia were the restricted names that traded higher on Monday. AMC Entertainment last traded up 8% after jumping more than 20% earlier in the session.
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 pay for the borrowed shares.
— CNBC’s Yun Li contributed to this report.
