Robinhood Slammed After Halting Users From Buying Surging Stocks
Users of the popular stock-trading app Robinhood expressed outrage on Thursday after the platform abruptly stopped allowing the purchase of high-flying stocks like GameStop and AMC Entertainment Holdings.
Charles Schwab and Interactive Brokers also clamped down on the mostly amateur traders who have driven the price of so-called meme stocks to stratospheric heights in recent days. Robinhood users pushed back on social media, decrying the actions as “rigged” and “complete bullshit.”
“The free market is only free until rich people lose money,” one tweeted.
Others called it “market manipulation” and urged investors to hold onto their shares.
GameStop has been a focus of the Reddit-driven uprising, with people on the r/WallStreetBets subreddit banding together to hype the stock and purchase it in droves. The shares soared, impacting bets by hedge funders that the video game chain’s shares would fall, and locked in massive losses. At least one hedge fund needed a bailout. The frenzy has boosted GameStop’s market value $10 billion in recent weeks and revealed once again the casino culture that powers the financial industry.
Shares of GameStop and AMC Entertainment continued their gyrations Thursday. GameStop dropped as much as 64%, triggering a trading halt for volatility. AMC dived 61%.
Earlier, Robinhood posted a blog notice.
“In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities,” the company wrote.
Robinhood also emailed customers a note that appeared to offer advice on how to be “an informed investor.”
People on the r/WallStreetBets subreddit also have driven wild increases in the stock prices of other companies ― including AMC, Blackberry, Nokia and the started-as-a-joke cryptocurrency Dogecoin.
While investors can choose from a multitude of brokerages, the easy-to-use Robinhood app is appealing to casual traders and new investors. It has grown popular on TikTok and helped proliferate an entire genre on the app called StockTok.
Robinhood did not respond to HuffPost’s request for comment on the move to stop buyers from purchasing certain stocks.
Other brokerages also took steps to calm the frenzy. “In the interest of mitigating risk for our company and clients, we have put in place several restrictions on some transactions in $GME, $AMC and other securities,” TD Ameritrade told MarketWatch on Wednesday.
Many on Twitter urged people to hang onto their investments.
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