GameStop rockets 80% as day traders celebrate Robinhood easing buying restrictions
- GameStop stock soared 80% in opening trading on Friday.
- Day traders are snapping up the video-game retailer's shares to make quick profits and squeeze short-sellers.
- Some high-profile investors are cheering on the frenzied buying, while others are sounding the alarm.
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The video-game retailer's stock has surged up to 2,500% this month, boosting its market capitalisation from $1.3 billion to as high as $34 billion earlier this week.
The key driver has been day traders gathering in Wall Street Bets and other online forums to organise mass purchases of heavily shorted stocks including GameStop, AMC, and BlackBerry.
Their goal has been to score quick profits and heap pressure on short-sellers, forcing them to buy shares to cover their positions and send the stock even higher. They have targeted Citron Research, Melvin Capital, Point72, and other hedge funds in recent days.
The frenzy has divided influential figures in the investment community. Tesla CEO Elon Musk tweeted "GameStonk!!," while venture capitalist Chris Sacca cheered the day traders on, but warned them not to load up on debt.
"Shark Tank" star Mark Cuban said he "loves" what's happening, and his 11-year-old son has cashed in on the craze. Social Capital boss Chamath Palihapitiya was egged on to buy GameStop calls and has pledged to donate his profits to the Barstool Fund, which supports small businesses.
However, Michael Burry of "The Big Short" fame - who laid the groundwork for the GameStop frenzy when he bought a stake in 2019 - has cautioned day traders not to get so enthralled with a stock that they own it out of blind faith.
Billionaire investor Leon Cooperman also decried retail investors for "attacking" the rich on Thursday, and said the rampant speculation would "end very badly for the public."
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