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A sign hangs in front of an AMC theater on January 27, 2021 in Chicago, Illinois. AMC Entertainment shares more than quadrupled today as investors continue their buying frenzy on heavily sold stocks.
Scott Olson | Getty Images
Besides GameStop, other popular short-squeeze targets among Reddit traders took big hits on Tuesday.
Shares of AMC Entertainment, which rose nearly 300% last week following a major squeeze, fell 40% in morning trading. The iShares Silver Trust ETF, in an attempt to squeeze the metal, fell 6%.
In other heavily shorted names that rebounded last week, BlackBerry fell 10%, Express slipped 31%, Koss fell 41%, Naked Brand lost 27%, and Nokia fell 5% soon after. the opening bell. Genius Brands lost 3%.
Short selling is a strategy in which investors borrow shares of a stock at a certain price with the expectation that the market value will fall below that level when paying for the borrowed stock. This is a strategy often used by hedge funds.
Amid last week’s retail investment frenzy in heavily bypassed names, Reddit-fueled traders led GameStop, AMC Entertainment, Koss and others to raise the stock, squeezing hedge funds short. circuit names. This week, those stocks are coming back down to Earth as Robinhood and other trading apps continue to restrict purchases of stocks and options contracts and trade pressure has lost momentum.
GameStop shares fell more than 50% on Tuesday.
Currently, Robinhood allows its clients to buy only 20 shares of GameStop and 350 shares of AMC Entertainment. Customers can per 700 shares of Blackberry and 1000 shares of Koss. However, if Robinhood’s clients own more than the share limit, they cannot buy any shares.
Robinhood and other brokers are required to meet certain clearing house deposit requirements. Due to the high volume of transactions, Robinhood said last week that it needed to impose the restrictions because the deposit requirements set by its clearinghouse were much higher than expected.
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