GameStop, AMC drove $5 billion in trades on Robinhood in a single day

By Gordon Gottsegen

Other brokerages, like Public and Moomoo, also saw a boost in activity

When meme stocks rally, the brokerages may benefit more than the investors.

On Tuesday night, CEO Vlad Tenev shared on X that Robinhood Markets Inc. (HOOD) saw $5 billion in equities trading volume that day, one of the biggest days for the online broker in the past 12 months.

In subsequent posts, he also stated that Robinhood would be upgrading some servers to prepare for even higher loads. A spokesperson for Robinhood declined to comment further.

Due to payment for order flow, in which market makers pay brokerages to send them their customers' trades, Robinhood stands to gain when its customers are inspired to trade more.

Robinhood critics contend this fact could lead to conflicts of interest such as incentivizing more trading or the gamification of investing. Robinhood has faced lawsuits over its alleged gamification practices, and has removed certain features that could be interpreted as gamification-like its confetti animation that would play when a trade was placed. During a 2021 congressional hearing, Tenev told lawmakers that, "We don't believe in gamification."

Shares of GameStop (GME) rallied in overnight trading on Sunday after X user "Roaring Kitty" began posting cryptic memes after a three-year hiatus. The account is associated with investor Keith Gill, whose posts in 2020 and 2021 were credited with helping drive the initial meme-stock frenzy.

GameStop shares jumped 74% on Monday and around another 60% on Tuesday, before pulling back over 30% intraday on Wednesday.

Read more: GameStop in 2024: Another meme-stock bubble or did apes never leave?

The dramatic jump was reminiscent of GameStop's boom in early 2021, and drove people to other meme stocks that were popular at the time, including AMC Entertainment Holdings Inc. (AMC), BlackBerry Ltd. (BB) and Koss Corp. (KOSS). With meme stocks making big gains, people were also wondering if this boost would match the magnitude of 2021. While not quite at that level yet, several brokerages felt the effects from the bump in meme stocks.

Online trading platform Moomoo also saw a dramatic increase in trading volume, but couldn't provide exact numbers.

"Trading volume for both stocks and options on the Moomoo platform has hit record highs over the past few weeks." Justin Zacks, Moomoo's vice president of strategy, told MarketWatch.

Other brokerages felt the effects of the meme stock revival too.

"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," a spokesperson for the investing app Public told MarketWatch.

While there has been a spike, Public's data shows that Nvidia Corp. (NVDA) shares and U.S. Treasurys remain the top traded assets by volume on the platform Wednesday, likely because members are more focused on long-term investing than short-term trading, the spokesperson said.

Public's distinction between short term traders and long term investors is important, because its app is more catered toward this type of behavior and its customer base reflects that.

Interactive Brokers also saw a jump in activity surrounding GameStop and AMC on Tuesday. GME became the third most active stock on the platform on Tuesday with 106,680 gross trades, up from 19th place on the Friday before. On Tuesday, AMC totaled 46,175 gross. For perspective, the average stock order size in April 2024 was 964 shares for IBKR clients.

GameStop's rise in IBKR's most active stock list is dramatic, but as seen in the chart above, popular stocks like (NVDA) and (TSLA) still ranked higher than the meme stocks.

According to Vanda Research Head of Data Giacomo Pierantoni, retail investors are still pouring money into AMC and GME with daily inflows of $51 million and $16 million respectively.

But Vanda also points out that this is still a fraction of what was seen in 2021. On top of that, retail turnover for GME was around 7%, while AMC saw about 10%. These numbers, while not insignificant, are lower than the meme stock boom in 2021.

Regardless, if stocks like GME and AMC reach trading volumes like the ones seen in 2021, there still is an increase in activity driven by retail investors. And when retail investors start placing more trades, retail brokerages often benefit.

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

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05-15-24 1556ET

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