Quick recap... Over the past few weeks, some “underdog” stocks have seen meteoric rises thanks to mass buying campaigns stoked through social media (mainly Reddit, via the subreddit r/wallstreetbets). Example: from January 11th to January 27th, GameStop shares surged 1,600%, and AMC stock soared 800%. Nokia, BlackBerry, Tootsie Roll, and others also skyrocketed on the unprecedented social momentum.
And then, yesterday happened... Some brokerages, including Robinhood, E-Trade, and Webull, temporarily restricted certain trading activity in symbols like GME. Investors of the restricted companies were only allowed to hold or sell shares (not buy more). Meanwhile, some brokers increased margin requirements (the percentage of the purchase investors need to fund themselves rather than borrow). Then...
This is an unprecedented moment in the market... From the rise of commission-free retail investing, to the surge of social-driven buying campaigns targeting hedge funds, we're moving into new territory for how the stock market operates. There's still a lot we don't know about this new reality and how it’ll unfold – including if structures, rules, or regulations will change to adapt to it.