Will GameStop Get Another Boost From the Robinhood Lawsuit?
The retail investors from the Wall Street Bets Reddit forum, known among themselves as "apes," are likely feeling vindicated about their meme stock choice of GameStop (NYSE: GME) this week. Robinhood (NASDAQ: HOOD), the online brokerage handling much of the GameStop "short squeeze" trading early in 2021, is the target of a lawsuit alleging damages from its trading limitations during the GameStop frenzy. But will this drama and legalistic uproar have any concrete effect on GameStop itself? Under the right circumstances, they might actually be to GameStop's benefit.
Robinhood, the retail stock trading platform that has hosted at least seven explosively successful IPOs in recent days, was also in the thick of the action during the world-famous GameStop short squeeze in 2021's first weeks. An army of retail investors, using the Reddit subforum r/WallStreetBets to discuss the situation, bought into GameStop and the share price soared. As a result, Robinhood eventually imposed trading restrictions on January 28. The restrictions blocked new purchases of GameStop shares, allowing traders only to sell their stock in the company. This led to share prices crashing from a peak of around $483 to a February low near $40.
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Source Fool.com
