How Robinhood Herding Drives Share Prices

Berkeley Haas finance professor Terrance Odean talks about his research of the Robinhood app and GameStop and the recent herding event that caused some controversy.

The recent incident where a large number of investors, mainly from the Reddit chat room WallStreetBets, coordinated to buy GameStop stocks on the Robinhood app has caught the world’s eye. The video-game retailer stocks soared more than 400% over three days and then fell 44% the next day as Robinhood and other brokerage firms temporarily curbed new purchases of GameStop. This led to tens of billions of dollars of market value being created and almost immediately, erased.

Odean had already been examining how Robinhood’s easy-to-use technology drives investor behavior and share prices. He shares his insights and research findings.