SAN ANSELMO, CALIFORNIA - DECEMBER 17: In this photo illustration, a notification about commission-free trading is displayed on the Robinhood application on December 17, 2020 in San Anselmo, California. The Securities and Exchange Commission has charged Silicon Valley start-up company Robinhood with deceiving customers about how the company makes money. The company has agreed to pay a $65 million civil penalty. (Photo Illustration by Justin Sullivan/Getty Images)
TSR Finance: Users of the popular stock-trading app Robinhood are calling the app out today after the platform just stopped allowing the purchase of surging stocks, mainly GameStop and AMC Entertainment Holdings.
In case you can’t make heads or tails of this situation–we got you. Robinhood basically put a pause on users buying or trading those stocks after a group of Reddit users from the WallStreetBets subreddit tried to stick it to WallStreet by driving up the stock prices for a few companies.
In other words, amateur day traders started to shift how things were done on Wall Street, as the Robinhood app allows for the purchase of those stocks without fees–an easy way to drive prices way up. Now, Robinhood said it’s blocking the purchase and trading of those stocks, citing “recent volatility” in the market as the reasoning behind the change, according to The Verge.
“We continuously monitor the markets and make changes where necessary. 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,” Robinhood said in a statement.
Of course, Robinhood users are not happy about the platform’s decision.
“The free market is only free until rich people lose money,” one user tweeted.
Others were calling it “market manipulation” and urged investors to hold onto their shares as “DO NOT SELL” trended Thursday morning.
The decision has even caught the attention of Congress. Rep. Rashida Tlaib, a Democrat from Michigan, posted Twitter that the decision was “beyond absurd,” and called for a hearing by The House Committee on Financial Services on “Robinhood’s market manipulation.”
It will be interesting to see how Robinhood responds to the mayhem, but there’s certainly a movement underway. We’ll keep you posted.
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