Robinhood Emerges as Meme Stock King: Daily Trading Volume Hits $5B

Robinhood, the disruptor of the American brokerage industry, has again found itself at the forefront of another meme stock frenzy. Vlad Tenev, the broker's CEO, revealed that Tuesday was one of the “biggest days in the past 12 months” for his company, as the daily equities trading volume touched $5 billion.

In comparison, Robinhood's total monthly equities trading volume was $70.7 billion in April, down 17 percent from the previous month’s $87.7 billion. Interestingly, in April 2023, the broker only handled $38.9 billion in equities trading volume.

Tenev further confirmed that Robinhood would be upgrading its infrastructure to prepare to handle “even higher load.”

We're going to be upgrading some of our systems tonight to make sure we're prepared for even higher load.

Some features, including 24 Hour Market, may not be available for a short period during the window of 1AM to 3AM ET.

The team is working hard to ensure things are running…

— Vlad Tenev (@vladtenev) May 15, 2024

The Roaring GameStop

The boost in equities trading this week was driven by retail traders' sudden interest in GameStop shares. The gaming-focused retailer's stock price jumped 74 percent on Monday and then another 60 percent on Tuesday. However, in Wednesday’s intraday trading session, the shares of the company pulled back by 30 percent.

Retail traders’ interest in GameStop stock in 2021 created a massive meme stock frenzy, resulting in a short squeeze as prominent hedge funds lost a significant amount on their open short positions in the company. It was a unique market move when coordinated activities of the retail traders, usually on the sub-Reddit WallStreetBets, forced the hedge funds to their knees.

The previous frenzy was triggered by a detailed analysis of the GameStop stock by some amateur retail investors, especially Keith Gill, who goes by his social media pseudonym, TheRoaringKitty. Gill and others saw value in the stock, which was heavily shorted by prominent hedge funds.

However, the latest frenzy is different and seems to have been triggered only by Gill's return to social media with a cryptic post on Sunday.

pic.twitter.com/YgjVqtgcNS

— Roaring Kitty (@TheRoaringKitty) May 13, 2024

Brokers Enjoying the Frenzy

Apart from Robinhood, other brokers also felt the sudden demand for meme stocks. According to Interactive Brokers data, GameStop was the third-most traded stock on Tuesday, only followed by chip-maker Nvidia and electric car maker Tesla.

Public, another retail broker, also acknowledged the recent demand for meme stocks like GameStop and AMC, but Nvidia and U.S. Treasurys were the top trading assets on the platform on Wednesday. A spokesperson from Public confirmed to MarketWatch that the trading volume of GME and AMC jumped by 300 percent week-over-week. Moomoo, an online trading platform, also confirmed an increase in trading volume with meme stocks but did not reveal any numbers.

GameStop and AMC stocks have jumped after a notable meme stock trader posted for the first time in three years, leading to a spike in options activity.
Go check out the options market statistics for GME and AMC on moomoo: https://t.co/PAtvBlak5y#options #AMC #GME #GameStop…

— moomoo (@moomooApp) May 14, 2024

Meanwhile, eToro, an Israeli broker that is proceeding with a public listing, has temporarily suspended trading with GameStop and AMC.

“When the price of a stock, such as $GME and $AMC, experiences significant volatility, the market where the stock is traded, NASDAQ in this case, implements a safety mechanism to temporarily halt pricing. This is done to ensure the accuracy and validity of the pricing information,” eToro noted in its announcement.

“Whilst the trading halts in this instance have been implemented at the exchange level, eToro also adopts such safety mechanisms, meaning from time to time, we may take the decision to temporarily halt prices.”