by Christy Bieber | Jan. 28, 2021
In case you missed the news, GameStop (NYSE: GME) has become one of the hottest stocks on the U.S. market this week. The company added $23 billion to its market value over just 10 trading days, with the share price briefly soaring close to $500 after a 1640% gain.
The retailer's stock price hasn't been climbing solely because traders are making a big bet that it'll turn a massive profit due to recent video game console releases, though. The stock's meteoric rise is largely being driven by traders on a Reddit board (r/wallstreetbets) executing a short squeeze.
See, Redditors have been rushing to purchase shares of the company and then restricting the ability of short sellers to buy them. Short sellers (mostly hedge funds) made big bets on GameStop's stock price falling, and there were around 55 million shares sold short. But with Redditors starting a buying frenzy, the stock price has gone up instead -- dramatically. And short sellers are now scrambling to cover their shorts (which means they have to buy the stock), so the share price is being driven even higher.
While this may all sound technical, the bottom line is that hedge funds and other Wall Street insiders are losing their shirts while some retail investors have made very generous profits (on paper, at least). The problem is, many popular trading platforms, including Robinhood, Interactive Brokers, TD Ameritrade, and Charles Schwab have started to either ban trading of GameStop shares or have imposed new restrictions on trading them.
This is leaving traders looking for other brokerages, with many wondering if you can buy GameStop through Webull.
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There's good news. You can buy GameStop through Webull (at least for now).
While Webull briefly joined the growing list of brokers halting trading of GameStop stocks on Thursday due to the "extreme volatility in the symbols," the company changed course on Thursday afternoon, tweeting out "UPDATE: GME, AMC, and KOSS are no longer restricted."
The bad news, however, is that if you do not already have a Webull account, you'll need to open one in order to buy GameStop (or any other stocks). To do this, you will need to upload a picture of your ID and provide your Social Security number and other financial information. Webull will also audit your information before you can open an account, which will take one to two days.
It's unclear what exactly will happen to GameStop's stock price by the time two days has passed. The bottom line is, the retailer's current inflated stock price isn't justified by the fundamentals. Shares could start to fall at any time, so betting big on GameStop is a high-risk strategy. And that's true whether you invest today or in two days after your Webull account is approved.
So, while you can buy GameStop stock through Webull, you should think seriously about whether you really want to bet your money on a Reddit caper that just happened to have turned out spectacularly well for those executing it. At some point, share prices are inevitably going to fall and the fun will be over -- and you don't want to be holding them when that happens.
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