Stockbroker service Robinhood has shut down the buying feature for GameStop among a number of other hot stocks on its app.
GameStop’s stock saw a massive rise after millions of individual retail investors bought the stock in an attempt to squeeze hedge fund investors planning to short it. The stock itself started at $64 on Monday and had risen to $347 by close on Wednesday.
Hedge fund investors who were attempting to short the stock lost $5 billion because of the campaign that started on Reddit forum WallStreetBets. But accusations that these retail investors were manipulating the market soon followed, prompting this move from Robinhood.
“We continuously monitor the markets and make changes where necessary,” the company said in a blog post. “In light of recent volatility, we are restricting transactions for certain securities to position closing only.”
Interactive Brokers and other also took the same steps as Robinhood in halting trading of GameStop amongst other volatile stocks.
Robinhood Shuts Buying Of Other Stocks
Robinhood also shut down the buying of AMC (AMC), Blackberry (BB), Bed Bath and Beyond (BBBY), Express (EXPR), Koss (KOSS), Naked Brand Corp (NAKD), and Nokia (NOK).
The move angered many traders who went on social media to voice their frustration. Such as Dave Portnoy of Barstool Sports who tweeted “Either @RobinhoodApp allows free trading like they say they do or they die. It’s really that simple.”
Additionally, traders on the WallStreetBets forum accused Robinhood and these other brokers of preventing them from buying these stocks to protect the hedge funds and Wall Street “suits”. Even going so far as to suggest a class-action lawsuit against Robinhood.
Interactive Brokers also released a statement on the situation to CNBC. “As of midday yesterday, (1/27/2021) Interactive Brokers has put AMC, BB, EXPR, GME, and KOSS option trading into liquidation. Only due to the extraordinary volatility in the markets. In addition, long stock positions will require 100% margin and short stock positions will require 300% margin until further notice.”
The move has united those from all sides in criticizing Robinhood and defending retail traders’ rights to take on Wall Street.
