Sen. Elizabeth WarrenElizabeth WarrenFederal Reserve officials' stock trading sparks ethics review Manchin keeps Washington guessing on what he wants Warren, Daines introduce bill honoring 13 killed in Kabul attack MORE (D-Mass.) on Wednesday took to Twitter to comment on GameStop’s recent stock surge spurred by amateur investors, with Warren criticizing hedge funds and wealthy investors “dismayed” by the GameStop trades.
GameStop on Wednesday surged again following a series of back-and-forth swings, trading at roughly $337 per share when it was briefly halted shortly after 1 p.m. ET, according to CNBC. This was an increase of about 128 percent from Tuesday’s market close, giving the company a market cap of about $23 billion on Wednesday.
The swings have largely been organized by amateur investors on forums such as Reddit and have forced a halt to trading multiple times, sparking confusion from traditional investors and short-sellers who are betting on the stock falling.
Warren responded to the recent developments on Twitter by writing, “With stocks soaring while millions are out of work and struggling to pay bills, it’s not news that the stock market doesn't reflect our actual economy.”
Warren, who has repeatedly levied criticisms against big banks and firms on Wall Street, went on to say in a follow-up tweet, “For years, the same hedge funds, private equity firms, and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price.”
“It's long past time for the SEC and other financial regulators to wake up and do their jobs,” the Democratic senator continued. “With a new administration and Democrats running Congress, I intend to make sure they do.”
With stocks soaring while millions are out of work and struggling to pay bills, it’s not news that the stock market doesn't reflect our actual economy. https://t.co/MeYHM8b8Cw— Elizabeth Warren (@SenWarren) January 27, 2021
It's long past time for the SEC and other financial regulators to wake up and do their jobs – and with a new administration and Democrats running Congress, I intend to make sure they do.— Elizabeth Warren (@SenWarren) January 27, 2021
The Texas-based video game company saw a boost in extended trading Tuesday after Tesla CEO Elon MuskElon Reeve MuskSpaceX sending first all-civilian crew into orbit Elon Musk's SpaceX vs. the environmentalists Biden seeks to build Democratic support among unions MORE tweeted out the link to the Reddit board where much of the GameStop stock discussion among investors was taking place.
Deutsche Bank strategist Jim Reid told CNBC that GameStop was the most traded stock on the market by value Tuesday.
The changes led to a rise in short selling, in which investors borrow shares of a stock to sell them at a certain price with the expectation that the value of the shares will fall. The short-seller then purchases an identical amount of shares to return to the investor they borrowed from and ideally pockets the difference between the money made by selling the original shares at a higher price and the money spent to purchase them when the price has fallen.
TD Ameritrade on Wednesday said it put in place restrictions on certain transactions involving GameStop “in the interest of mitigating risk for our company and clients,” and Charles Schwab also tightened trading restrictions around some stocks.
While investors on Reddit and other platforms defended their actions, arguing they are creating a new group of investors in the stock market, traditional investors have pushed back against the sudden changes.
Hedge fund manager Michael Burry, who reported holding 1.7 million shares of the GameStop stock at the end of September, said in a since-deleted tweet that the rise was “unnatural, insane, and dangerous,” according to CNBC.
Sylvan Lane contributed.