Stocks and index ETFs are recovering from their biggest one-day losses since October on Wednesday, driven lower by speculative buying in heavily shorted stocks like GameStop.

GameStop has been a favorite on the WallStreetBets Reddit chat room, as investors have successfully driven the stock over 300% higher. On Wednesday, the surging stock sank over 20% in a Bitcoin-like display which included multiple trading halts. The stock started tumbling as rumors of broker restrictions began to spread, with outfits like Interactive Brokers and Robinhood curbing transactions for heavily shorted names. AMC Entertainment also plummeted 50% after rocketing a massive 300% in the previous session.

The video game retailer exploded over 1,300% in January alone as green traders pile into the stock and call options to generate massive short squeezes in the gaming retailer’s stock. Currently the stock is still the most shorted name in the market, with 120% of its float shares sold short, according to FactSet. The moves have been driving key holders of the stock like the Wedbush ETFMG Video Game Tech ETF (GAMR), which is down almost 10% as well Thursday.

“This market action is nothing more than another epic parabolic bubble that has been going on since the history of time,” Peter Boockvar, chief investment officer at Bleakley Advisory Group, said in a note. “This is not investing. This is not planning for one’s retirement with a diversified portfolio. This is not prudent analysis of stocks… And these traders forget that buying a stock is buying a piece of a company but instead they are just speculating on a stock symbol in the ultimate game of hot potato.”

Will the Buying Continue?

While the stock had a rough day on Wednesday, supporters of the gaming retailer continue to push the long trade in chat rooms.

One trending post gathered over 1,000 comments in an hour, saying “don’t be scared of the drop in $GME $BB. Hedge funds trade after hours to scare y’all…KEEP BUYING AND HOLDING.”

Another top post in the community said “buy high, sell never.”

Some ardent Reddit users have even been sharing screenshots of their brokerage accounts, showing monstrous returns from trading in GameStop in an attempt to lure and incentivize speculators.

Reaction from Washington

With all the hype comes regulatory oversight. House Speaker Nancy Pelosi told reporters at a briefing that she believes that the Biden administration is aware of the chatter and speculation, and that “we’ll all be reviewing it.” She also called the stock’s moves ‘interesting’, as some brokers decided to curb trading in GamesStop.

Billionaire investor David Tepper told CNBC early Thursday that investors should be leery when buying speculative names like GameStop. The prices moves have affected ETFs like the Invesco S&P SmallCap Value with Momentum ETF (XSVM) and the Invesco S&P SmallCap Consumer Discretionary ETF (PSCD).

XSVM 1 Year Performance

“It was ‘party on dot-com’ in 1999 that screwed the shorts, and now it’s ‘gang up inc.’ It didn’t end well in 1999 when the dot-com bubble popped. Been there, done that. Old scars,” Tepper told CNBC’s Joe Kernen on “Squawk Box.”

Trading volume surged amid the retail stock buying spree on Wednesday with 23.7 billion shares changing hands, marking the heaviest trading day since at least 2007. On Wednesday, U.S. equity option volumes notched a record 24.5 billion shares and 57.1 million contracts, according to Piper Sandler.

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