Somebody is gonna get sued!
Robinhood blocks users from buying GameStop and AMC shares
By Thornton McEnery and Lisa Fickenscher
Robinhood clamped down on trades of volatile stocks including GameStop and AMC in a bid to contain bizarre price swings orchestrated by day traders on a Reddit forum.
The millennial-focused stock-trading app told its customers early Thursday that they will not be able to purchase new shares of GameStop, AMC, and other stocks that have fueled the “Reddit Rally,” although they will be able to close out their positions.
“This stock is not supported on Robinhood,” read a typical pop-up alert for users who tried to buy.
Shares of GameStop and AMC — which multiplied in value earlier this week as traders on the Reddit forum “WallStreetBets” pumped them — seesawed in early trades after Robinhood’s move.
While GameStop shares were recently up 10 percent after spiking higher earlier, they recently tumbled more than 50 percent in late-morning trades. AMC shares were off more than 60 percent. The restrictions also were imposed on shares of BlackBerry, Nokia, Koss and the Express retail chain, all of which were down by big, double-digit percentages.
Robinhood has blocked users from buying stock in GameStop and AMC.Jim Watson/AFP via Getty Images
“We continuously monitor the markets and make changes where necessary,” read a statement on the company’s website posted Thursday morning. “In light of recent volatility, we are restricting transactions for certain securities to position closing only.”
The Robinhood added that it also raised margin requirements for certain stocks, meaning that investors would be forced to put down more collateral when making bets for or against them.
The moves infuriated users who have turned their short squeezing of big hedge funds and banks into a crusade.
“Unbelievable!!! This is so crazy right before our eyes, we are being shown this is not a Capitalist free market,” tweeted an angry investor in the wildly popular platform aimed at young investors.
“If there’s ever a class action lawsuit against @RobinhoodApp, count me in,” tweeted another.
Charles Schwab and TD Ameritrade’s stock-trading platforms, which on Wednesday had announced similar restrictions on GameStop, AMC and other stocks, meanwhile suffered intermittent outages Thursday that had begun a day earlier.
Robinhood’s move comes as regulatory scrutiny intensifies around the rally as Wall Street and Washington, DC, try to see if there’s more to the recent manic short squeezes on stocks than just a bunch of retail traders on social media using no-fee apps to pump prices on shorted stocks.
Robinhood is also looking to go public as soon as this quarter and is likely eager to avoid being dragged into any messy investigations if users end up losing massive sums trading complicated options in an unprecedented market environment.
TD Ameritrade has announced restrictions on GameStop, AMC and other stocks.
Alex Tai/SOPA Images/LightRocket via Getty Images
The company was bashed in June when a 20-year-old user took his own life after seemingly misunderstanding how much he lost trading options on the app.
But while the company appears to have moved quickly to stifle the volatility on these select stocks, it might end up in a dangerous game of self-regulatory Whack-a-Mole as Reddit users appear to have found new targets.
Shares in deeply shorted American Airlines popped almost 40 percent in a matter of minutes in pre-market action, showing classic indicators of Reddit users jumping in on yet another stock to short squeeze it with stunning speed and volume.
Robinhood blocks users from buying GameStop and AMC shares
By Thornton McEnery and Lisa Fickenscher
Robinhood clamped down on trades of volatile stocks including GameStop and AMC in a bid to contain bizarre price swings orchestrated by day traders on a Reddit forum.
The millennial-focused stock-trading app told its customers early Thursday that they will not be able to purchase new shares of GameStop, AMC, and other stocks that have fueled the “Reddit Rally,” although they will be able to close out their positions.
“This stock is not supported on Robinhood,” read a typical pop-up alert for users who tried to buy.
Shares of GameStop and AMC — which multiplied in value earlier this week as traders on the Reddit forum “WallStreetBets” pumped them — seesawed in early trades after Robinhood’s move.
While GameStop shares were recently up 10 percent after spiking higher earlier, they recently tumbled more than 50 percent in late-morning trades. AMC shares were off more than 60 percent. The restrictions also were imposed on shares of BlackBerry, Nokia, Koss and the Express retail chain, all of which were down by big, double-digit percentages.
Robinhood has blocked users from buying stock in GameStop and AMC.Jim Watson/AFP via Getty Images
“We continuously monitor the markets and make changes where necessary,” read a statement on the company’s website posted Thursday morning. “In light of recent volatility, we are restricting transactions for certain securities to position closing only.”
The Robinhood added that it also raised margin requirements for certain stocks, meaning that investors would be forced to put down more collateral when making bets for or against them.
The moves infuriated users who have turned their short squeezing of big hedge funds and banks into a crusade.
“Unbelievable!!! This is so crazy right before our eyes, we are being shown this is not a Capitalist free market,” tweeted an angry investor in the wildly popular platform aimed at young investors.
“If there’s ever a class action lawsuit against @RobinhoodApp, count me in,” tweeted another.
Charles Schwab and TD Ameritrade’s stock-trading platforms, which on Wednesday had announced similar restrictions on GameStop, AMC and other stocks, meanwhile suffered intermittent outages Thursday that had begun a day earlier.
Robinhood’s move comes as regulatory scrutiny intensifies around the rally as Wall Street and Washington, DC, try to see if there’s more to the recent manic short squeezes on stocks than just a bunch of retail traders on social media using no-fee apps to pump prices on shorted stocks.
Robinhood is also looking to go public as soon as this quarter and is likely eager to avoid being dragged into any messy investigations if users end up losing massive sums trading complicated options in an unprecedented market environment.
TD Ameritrade has announced restrictions on GameStop, AMC and other stocks.
Alex Tai/SOPA Images/LightRocket via Getty Images
The company was bashed in June when a 20-year-old user took his own life after seemingly misunderstanding how much he lost trading options on the app.
But while the company appears to have moved quickly to stifle the volatility on these select stocks, it might end up in a dangerous game of self-regulatory Whack-a-Mole as Reddit users appear to have found new targets.
Shares in deeply shorted American Airlines popped almost 40 percent in a matter of minutes in pre-market action, showing classic indicators of Reddit users jumping in on yet another stock to short squeeze it with stunning speed and volume.
