Nearly 900,000 individual accounts traded shares of GameStop in a single day after a 90-fold increase at the height of the “meme stock” craze, according to a report by the US securities regulator.
GameStop, a struggling video games retailer, became an emblem of the mania that gripped markets in January when its shares surged by 2,700 per cent in less than three weeks. Individual traders organised on online message boards and collectively unleashed furious rallies in certain stocks.
The US Securities and Exchange Commission studied the events and on Monday released a report that offered a first glimpse into the true scale of the phenomenon. For GameStop, the number of individual accounts trading its shares rose from about 10,000 a day at the start of the year to nearly 900,000 at the peak on January 27.
“This was a real mania,” said Steve Sosnick, chief strategist at retail trading platform Interactive Brokers, in response to the SEC report. “I can’t remember ever seeing a number like this in an individual stock, even in the height of the internet bubble. In that context, this is ‘Wow’.”
The volume of traders in GameStop and other meme stocks stressed both the resiliency and capital stores of brokers, forcing some to temporarily halt trading in certain equities. Robinhood, a retail broker, had to raise $2.4bn in emergency cash to shore up its finances during the turbulence.
“A 90x surge, we don’t see numbers like that,” said an analyst at a leading research firm. “It took on a life of its own, and got more publicity as it went up. Every day you were hearing about GameStop doubling and tripling.”
The rising number of accounts buying and selling GameStop shares each day closely tracked the stock’s staggering jump in valuation.
From January 12 to January 13, the number of individual accounts trading GameStop rose from 9,220 to 60,515, according to the SEC analysis of Consolidated Audit Trail data, a six-fold increase. The price of GameStop surged 2,700 per cent from January 8 to January 27, hitting an intraday high of $483 on January 28 before tumbling 86 per cent to the end of the first week of February.
On January 28 the number of individual accounts trading GameStop also dropped by more than 250,000 from the peak of nearly 900,000 the day before, according to the SEC.
The SEC made no specific recommendations on how revelations from the GameStop trading event might affect market regulation, but noted it presented an opportunity to continue to “reflect on the market structure and regulatory framework”.
Trading volumes in GameStop also shot up 1,400 per cent to more than 100m shares daily between January 13 and 29 from 2020 levels. On Monday the stock closed up 1.5 per cent at $186.02.
The accessibility of options trading to retail investors helped buoy the surge. The SEC said that by mid-January, 91 per cent of non-market maker options volume came from individual investors, while two-thirds of the option volume from retail investors came through brokers Robinhood, ETrade and TD Ameritrade.