GameStop, others tumble as Robinhood restricts trades

Shares of GameStop went on a wild ride Thursday after trading app Robinhood said it was restricting trading in the gaming retailer.

The stock has been at the center of a battle between small-time traders and deep-pocketed hedge funds that has shaken stocks around the world...

Interactive Brokers Group said Thursday that it too had restricted trades in a number of so-called frenzy stocks like GameStop, theatre chain AMC, and BlackBerry.

TD Ameritrade did the same on Wednesday.

Driven by an army of individual traders using online brokerage apps like Robinhood and anonymous social media messaging boards, shares of GameStop have seen a powerful two-week surge - up an eye-popping 1700 percent - hammering fund investors who were betting the stock would fall.

Reddit discussion groups were once again humming on Thursday as membership of the trader-focused group WallStreetBets raced past 4 million.

Veteran research analyst Michael Pachter of Wedbush Securities said the whole thing feels like a pyramid scheme.

"Wall Street Bets' theory is, you know, we'll buy it at $20 and somebody will buy it from us at $30, and that happened. Then the next group bought it $30 and somebody will buy from them at $40, and it happened. Then $70, then $140, then $200 and $300. And it'll keep going up as long as demand stays high. But the question is, when does that demand dissipate?"

Theater chain operator AMC, which has seen ticket sales almost totally evaporate due to the health crisis, has also gone along for the ride. The stock has skyrocketed 10-fold in just a matter of weeks.

And it's not just U.S. companies - several global stocks are caught up in the euphoria as well - which have only increased calls for a regulatory crackdown.

Some professional market watchers say the current frenzy raises all sorts of questions with respect to possible market manipulation.

But, supporters of the amateur traders say the social media chatrooms and investing apps are democratizing the world of Wall Street.

Thursday’s trading restrictions sparked outrage on social media as locked-out small investors watched shares of GameStop plunge.