Shares of GameStop and other companies caught in the recent frenzy bounced on Friday, after online broker Robinhood lifted all the buying curbs imposed at the apex of the battle between amateur investors and Wall Street hedge funds.
The videogame retailer, the initial trigger for the market slugfest after gaining popularity on social media platform Reddit’s WallStreetBets, closed up 19.20% at $63.77 after hitting a session high of $95, although the wild gyrations seen in the past two weeks appeared to be easing.
“The WallStreetBets influence is diminishing to a certain extent because there are a lot of people that got burned,” said Dennis Dick, head of markets structure and a proprietary trader at Bright Trading LLC in Las Vegas.
“From a short seller’s perspective, I was spooked a week-and-a-half ago to short any small caps because I was worried WallStreetBets could squeeze me on it,” Dick said.
“I’m not spooked anymore; I kind of went back to normal trading, so I can say I think the WallStreetBets influence is not as strong as it was last week.”
Robinhood, among the fee-free online brokers credited with fuelling the trades, said late on Thursday it had removed all buying restrictions imposed due to a surge in clearinghouse deposit requirements last week.
With many of the stocks involved in the so-called “Reddit rally” slumping this week, hedge funds with bearish positions on GameStop made $3.6 billion in profits compared with losses of $12.5 billion in January, financial analytics firm Ortex said on Friday.
Other stocks that have seen sharp declines as their fortunes reversed in the social media phenomenon, such as Koss Corp and the U.S.-listed shares of Blackberry closed higher on Friday, while others such as Bed, Bath & Beyond, saw their price fall slow.
U.S. Treasury Secretary Janet Yellen met with top officials on Thursday to discuss the volatility as regulators were looking at all aspects of the rally and all parties involved.
GameStop’s stock has crashed to as low as $51.09 after scaling as high as $483 last week, but is still up about 220% from levels at the start of the rally in mid-January. Shares of cinema operator AMC Entertainment have more than halved from a closing peak of $19.90 and closed down 3.67% on Friday.