(Reuters) – Top executives from hedge funds and the Robinhood trading platform will appear before a U.S. House panel on Thursday to explain how a flood of retail trading drove shares of GameStop and other stocks to extreme highs, squeezing short sellers who had bet against them.
Here is a timeline of the stock’s rapid 1,600% rise, the social media-fueled retail activity that helped drive it, and how firms like hedge funds Citadel and Melvin Capital, along with retail brokerages like Robinhood, played a part in the action.
Oct. 2019: Major retail brokers drop trading commissions, a model Robinhood helped pioneer by relying on payments from market making firms for revenue in exchange for their customers’ buy and sell orders, ushering in a boom in retail trading.
July 27, 2020: Roaring Kitty, aka Keith Gill, starts posting YouTube videos on GameStop https://www.youtube.com/watch?v=GZTr1-Gp74U, saying he sees value in the heavily shorted stock he had been investing in since June 2019. Gill also posts on the Reddit forum WallStreetBets under the name DeepF***ingValue, according to an interview in the Wall Street Journal.
Dec 8, 2020: GameStop shares tank after company misses Wall Street estimates for quarterly revenue as pandemic-led store closures and intense competition from digital-game sellers hit sales.
Jan 11: GameStop appoints Chewy.com founder and two other e-commerce veterans to its board in a deal with investor Ryan Cohen’s RC Ventures, as it doubles down on digital sales
Jan 12: Short interest at 70.9 mln shares, down from 71.2 mln on Jan 8, per S3 Partners. Notional value of short bets rose to $1.4 bln from $1.3 bln, reflecting the rising stock price
Jan 13: GameStop shares rise 57%, followed by another 27% jump the next day to $39.90. Its median target price among analysts is $12.50.
Jan 19: Short seller Citron Research takes aim. Tweets about GameStop, saying buyers at these levels are “the suckers at this poker game” and stock “back to $20 fast.”
Jan 20: Citron Research delays negative report, says it does not want to go live with its report on the stock
Jan 22: Shares rise another 50%.
Jan 25: GameStop stock soars as much 144% then settles up 18% with retail traders storming in to buy more.
Jan 25: Hedge fund Melvin Capital Management receives $2.75 billion investment from Citadel, the Chicago-based hedge fund led by Ken Griffin, and billionaire investor Steven A. Cohen’s Point72 Asset Management, after losing on a series of short bets, including on GameStop. Griffin also founded Citadel Securities, one of several market making firms that pays to execute customer orders from Robinhood.
Jan 26: Elon Musk tweets “Gamestonk!!”, along with a link to Reddit’s Wallstreetbets stock trading discussion group, where supporters refer to the Tesla CEO as “Papa Musk.” https://twitter.com/elonmusk/status/1354174279894642703
Jan 26: Shares surge 92.7%. Top securities regulator in Massachusetts reportedly says trading in GameStop suggests there is something “systemically wrong” with the options trading.
Jan 27: Trading volumes in U.S. cash equities and options hit all-time record levels at 24.5 billion shares traded and 57.1 million contracts traded.
Jan 27: GameStop hits a closing high of $347.51.
Jan 27: Melvin Capital and Citron close the majority of their GameStop position at a loss.
Jan 28: Robinhood, along with several other brokerages, restricts trading in GameStop and a handful of stocks after the regulatory deposit requirements for settling the securities skyrocket. With buying restricted at many brokerages, but selling allowed, the stocks sell off.
Jan 28: The U.S. House Financial Services and Senate Banking committees says to hold a Feb. 18 hearing on the stock market following the trading restrictions.
Jan 29: Robinhood begins easing trading restrictions on stocks caught up in the so-called Reddit rally.
Feb 1: Robinhood raises $2.4 billion in capital after raising $1 billion the previous week.
Feb 2: U.S. Treasury Secretary Janet Yellen calls meeting of top financial regulators to discuss market volatility driven by retail trading in GameStop and other stocks.
Feb 4: Robinhood removes all trading curbs. The following day, GameStop hits a session high of $95 and closes up 19.20% at $63.77.
Feb 9: GameStop trading at around $40 a share.
Feb 18: U.S. House panel holds hearing titled: “Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=407107.”
(Reporting by Danilo Masoni in Milan and Julien Ponthus in London and John McCrank in New York, Editing by Megan Davies and Lincoln Feast.)