What happened
Reddit traders are back. After licking their wounds following GameStop's (GME 2.50%) brutal decline from its highs, the Wallstreetbets-led army of individual investors appears to be trying to ignite a new round of short squeezes.
Here's how some of the most popular Reddit stocks fared on Wednesday:
- Express (EXPR +0.00%), up 41%
- Naked Brand Group (NAKD +0.00%), up 31%
- AMC Entertainment (AMC +16.15%), up 18%
- Sundial Growers (SNDL +0.00%), up 15%
- BlackBerry (BB +3.52%), up 9%
So what
Many investors were infuriated when Robinhood and other brokerages placed restrictions on their customers' ability to buy shares of GameStop and other heavily shorted stocks back in January. Those moves helped end the trading frenzy in GameStop and other popular Reddit stocks, leading to a sharp decline in their prices.
Shares of Express, Naked Brand, AMC, Sundial, and BlackBerry rebounded on Wednesday. Image source: Getty Images.
Following heavy criticism from investors and regulators, Robinhood eventually moved to allow uninterrupted trading in GameStop and the other stocks for which it had limited purchases. The popular trading platform said the restrictions were temporarily necessary due to soaring capital requirements imposed by clearinghouses during the trading frenzy. Robinhood subsequently raised several billion dollars from investors to better comply with those requirements should trading volumes increase once again.
Now what
Well, Reddit traders appear to be gearing up to test Robinhood's newly strengthened capital reserves. With the trading platform likely to be reluctant to impose new buying restrictions due to the backlash it faced last time around, it will be interesting to see how any potential short squeezes will play out with no interference from Robinhood.
