Robinhood, a stocksharing app that’s been the preferred platform of Redditors and stock market newbies amidst the recent “short-squeeze” craze that’s sent Gamestop, AMC and other struggling companies’ stock soaring, has restricted trading on multiple hot stocks to “closing” only.
The app stated in a blog post this morning, “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.” They also banned Dogecoin after its stock rose 150%.
The move angered social media users, who felt it ran counter to the app’s supposed ethos of “democratizing finance for all.”
The entire Gamestop stock craze began when Redditors on /r/WallStreetBets noticed that an abundance of retail companies were being massively short sold by hedge funds and Wall Street high rollers. This means the hedge funds were borrowing stock for retail companies that appeared to be on death’s door and selling their stock as a bet that their price would go down. Eventually, they thought they would buy back the stock at that low price, return it and keep the profit. Redditors noticed the game and purchased stocks in these companies in an attempt to make the stock price rise and cause a “short squeeze,” forcing the short sellers to “close” their stock and make the price rise even higher.
For some, this has been a feel-good story of the common man outmaneuvering predatory finance types, as the massive surges in stocks like Gamestop meant that when short-sellers close their stock, they lose money, as its price is much higher than what they borrowed it at. Meanwhile, the Redditors of /r/WallStreetBets and anyone else who got in the game when the going was good made significant profits. In the eyes of Redditors and amateur stock enthusiasts, this was just as fair as the practices employed by hedge fund managers to make money.
However, the decision to prevent trading on these stocks by brokerages…
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