Just before markets open, the Securities and Exchange Commission wades into the fray, warning brokerages and Reddit users that it is watching.
"We will act to protect retail investors when the facts demonstrate abusive or manipulative trading activity that is prohibited by the federal securities laws," it said in a statement. "Market participants should be careful to avoid such activity."
GameStop shares soar when the market opens, leaping 113% to an intraday high of $413.98. GameStop is up more than 400% on the week.
GameStop short sellers endure mark-to-market losses of $19.8 billion this year, according to S3 Partners.
Robinhood and other brokerages like Interactive Brokers restrict trading in GameStop stock, setting off a backlash on social media.
Robinhood says the halt in trading is necessary to comply with SEC mandates.
“These requirements exist to protect investors and the markets, and we take our responsibilities to comply with them seriously, including through the measures we have taken today,” the company says.
After the announcement, GameStop shares slide into the negative. The stock, which traded above $500 at one point in premarket trading, closes down 44%.
Later Thursday night, Robinhood says it will allow limited buying of the stocks.
GameStop shares continue to surge, with the stock being halted for volatility nine times on Monday and five times on Tuesday. The WallStreetBets forum reaches 5.2 million subscribers and goes offline for a few hours as moderators catch up with the volume of material.
GameStop trading is halted at least four times because of volatility. Its stock jumps by 51% in a day and closes at a then-record high. Reddit users celebrate and promise more is to come.
Short-selling investment firm Citron Research incenses Reddit users more in a condescending tweet that calls GameStop buyers "the suckers at this poker game." Citron later says it has discontinued short selling research after 20 years, focusing instead on long investing.
Seeing an optimistic future for GameStop and an opportunity for gains in a company that institutional investors bet against, Reddit thread r/WallStreetBets starts buying GameStop shares.
The company’s stock begins to climb, popping 12% the first day. By January 14, the battle between Reddit and short-selling hedge funds begins in earnest. Purchases on both sides cause the company's stock to surge 27% in one day.
GameStop names Cohen and two other former Chewy execs to its board and charges them with transforming the business into a digital success story. Shares nearly double the week after the announcement.
Ryan Cohen, cofounder of online pet supply company Chewy, discloses that he holds a major stake in GameStop. With his record of e-commerce success, Cohen leads GameStop to focus less on physical stores and more on digital sales, esports and mobile gaming.