Equities

GameStop, AMC Fuel $5B Robinhood Trades in a Day

Robinhood sees $5 billion in trades amid meme stock surge, highlighting retail investors' market impact.

By Alex P. Chase

5/15, 17:19 EDT
AMC Entertainment Holdings, Inc.
Robinhood Markets, Inc.
NVIDIA Corporation
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Key Takeaway

  • Robinhood saw a $5 billion trading volume in one day, driven by a surge in GameStop and AMC stocks due to social media influence.
  • The meme stock rally affected multiple brokerages, with platforms like Public reporting a 300% increase in GME and AMC trades.
  • Despite market skepticism, retail investors' significant daily inflows into meme stocks indicate ongoing interest and impact on market dynamics.

Meme Stock Rally Sparks Brokerage Activity

On Tuesday, Robinhood Markets Inc. experienced one of its most significant trading volumes in the past 12 months, with CEO Vlad Tenev revealing a $5 billion equities trading volume. This surge is attributed to a renewed interest in meme stocks, notably GameStop and AMC Entertainment Holdings Inc., which saw dramatic increases in their stock prices following social media activity by influential figures such as Keith Gill, known as "Roaring Kitty." This resurgence in meme stock trading has not only captivated investors but has also led to Robinhood preparing for higher loads by upgrading some servers.

Brokerages Benefit from Increased Trading

The phenomenon of meme stocks rallying, such as GameStop's 74% jump on Monday followed by a 60% increase on Tuesday, has had a ripple effect on various online trading platforms. Moomoo and Public, among others, reported significant spikes in trading volume, with Public noting a 300% week-over-week growth in GME and AMC shares traded. Despite these surges, platforms like Public observed that their members still prioritize long-term investments, with Nvidia Corp. and U.S. Treasurys remaining the top traded assets. Interactive Brokers also saw GameStop and AMC climb their most active stock lists, indicating a broad impact of the meme stock revival on brokerage activity.

Retail Investors Drive Market Dynamics

The resurgence of interest in meme stocks has led to a notable increase in retail investment, with Vanda Research reporting daily inflows of $16 million into GameStop and $37 million into AMC. This activity, while significant, still represents a fraction of the trading volumes seen during the meme stock boom of 2021. The current trading environment showcases a mix of strategies, including a high volume of options trading, indicating a diversified approach by retail investors beyond merely purchasing stocks.

Challenges and Market Dynamics

Despite the excitement surrounding the recent meme stock rally, there are challenges and skepticism regarding the sustainability of these surges. Analysts point to the detachment of trading activity from fundamental company values, with GameStop trading at a price-to-earnings multiple significantly higher than industry norms. Additionally, the percentage of shares sold short has decreased from the levels seen in 2021, suggesting a shift in market dynamics that could impact the effectiveness of retail trading strategies aimed at squeezing short sellers.

Street Views

  • Giacomo Pierantoni, Vanda Research (Neutral on AMC and GME):

    "Retail investors are still pouring money into AMC and GME with daily inflows of $51 million and $16 million respectively."

Management Quotes

  • Vlad Tenev, CEO of Robinhood:

    "Robinhood Markets Inc. HOOD, +2.77% saw $5 billion in equities trading volume that day, one of the biggest days for the online broker in the past 12 months." "We don’t believe in gamification."

  • Justin Zacks, Moomoo’s vice president of strategy:

    "Trading volume for both stocks and options on the Moomoo platform has hit record highs over the past few weeks."

  • Public spokesperson:

    "Over the past few days, we have seen elevated trading volumes in GME and AMC – with a 300% WoW growth of GME and AMC shares traded."