Retail Brokerage Firms Limit Trading On GameStop Stock
NEW YORK (CBSNewYork) -- Retail brokerage firms are now limiting trading on GameStop stock, which has been surging this month.
The video game retailer's stock was suddenly soaring because it seems buyers wanted to hurt the big guys, and they succeeded.
In less than a year, the stock jumped from less than $3 a share to almost $350, though it tumbled Thursday on trade restrictions.
GameStop has been right in the middle of a new Wall Street game, one we don't see very often.
"People are calling this David versus Goliath, the little guy versus the big guy, is that what we're seeing here?" CBS2's Dick Brennan asked Tim Ghriskey, chief investment strategist with Inverness Counsel.
"The little guy did well in this situation and the big guys, the hedge funds, are the ones who got hurt. Unusual, maybe won't be repeatable, but, you know, hooray for the little guys," Ghriskey said.
It's been a cash cow for many college kids, some who made up to ten times their money investing in the retailer's stock.
"It definitely feels good to look at my phone and see that nice big number," said one college sophomore.
"I am shocked because, yeah, I didn't know this could happen in such a quick amount of time," a college senior said.
RELATED STORY -- GameStop Stock Rockets As Everyday Investors Cause Professional Traders To Lose Millions
All last year, GameStop was struggling, its stock selling at less than $20 a share. Big Wall Street investors jumped in and they started "shorting" the stock, betting the price would drop.
That means that they'd make money on the loss, but if the GameStop stock rose, they would be the losers.
"It is competing against companies like Amazon," said Stephanie Mehta, with Fast Company. "You can see why companies bet against it."
That angered small investors, who used the Reddit forum to encourage others to buy, a so-called short squeeze, driving up the stock price dramatically and creating massive losses for those big-time Wall Street investors.
"Have we ever seen anything like this on Wall Street?" Brennan asked Ghriskey.
"I've never seen anything like this before, specifically. I've seen big institutions do it, but nothing where a group of individuals got together, the little guys, did it and were successful," Ghriskey said.
RELATED STORY -- GameStop And The Stock Market: What's Going On?
Jaime Rogozinski created the Wall Street Bets Reddit forum in 2012. He says small investors were happy with their market handiwork.
"There is something to be said about the fact that pretty much anybody can do it, too, and watching them do it collectively is certainly a show," Rogozinski said.
As with all things on Wall Street, there is risk, and this case may be a lesson to people who want to sell short.
"For short sellers, you have to be very careful. If it's a smaller company, if it's a company that's very depressed in stock price, you've got to watch out because buyers can come in very quickly and really hurt you," Ghriskey said.
RELATED STORY -- Does GameStop's Soaring Stock Indicate A Possible Market Bubble?
Shares of GameStop and other affected stocks, like AMC Theatres, plunged 44% Thursday when Robinhood, among other trading apps, restricted trading in some 13 stocks.
Bipartisan lawmakers, including Alexandria Ocasio-Cortez and Ted Cruz, are demanding an investigation.
Robinhood's CEO, Vlad Tenev, denied that the trading restriction was designed to help big-money investors.
"So we haven't really seen anything like this before, and to prudently manage the risk and the deposit requirements, we had to restrict buying in these 13 stocks," he said.
A big question going forward: in this volatile market, what should investors do?
"I think the people that are novices that are in here trying to take advantage of things have to be very careful because this can go either way," said Harry Abrahamsen, of Abrahamsen Financial Group.
Robinhood said some restrictions will be lifted Friday, but New York Attorney General Letitia James says she is looking into the trading restriction.
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