GameStop shares plummeted on Thursday after trading app Robinhood restricted purchases following a staggering rally driven by Reddit users buying up the stock in a battle with hedge funds that had bet against it.
At 11.13am, GameStop shares were down 56 percent, at $153 after earlier hitting $500 in pre-market. Still, users of the Reddit forum WallStreetBets boasted that they had ‘diamond hands’, their term for a trader who refuses to sell until reaching their ultimate goal, and predicted an eminent rally.
The GameStop stock frenzy has led to TD Ameritrade and Robinhood restricting new purchases of particular stocks (GameStop and AMC, among others). It also led to the Wall Street Bets subreddit temporarily getting locked and a Discord server getting shut down for violating terms of service.
On Thursday morning, Twitter users began posting screenshots of their Robinhood app that showed a message appended to the stocks of GameStop, AMC, Nokia and Bed, Bath and Beyond:
“This stock is not supported on Robinhood.”
Robinhood explained the move in a blog post Thursday morning, just before the stock exchanges opened: “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.”
The move drew swift condemnation from some of the platform’s previously vocal advocates, including investors who are seeking to capitalize on a massive wave of interest in struggling companies whose stocks had been shorted by sophisticated investors.
Nasdaq CEO Adena Friedman told CNBC on Wednesday that if there is any market manipulation going on, it may halt the trading of a stock to investigate. AMC is listed on Nasdaq, while GameStop is traded on the New York Stock Exchange.
Outrage at Robinhood appeared to briefly unite the country, with GOP Senator Ted Cruz, Don Trump Jr, and Democrat Reps. Alexandria Ocasio-Cortez and Rashida Tlaib all blasting the trading app for shutting down trades while hedge funds remain free to buy and sell stocks as they please.
This is beyond absurd. @FSCDems need to have a hearing on Robinhood’s market manipulation. They’re blocking the ability to trade to protect Wall St. hedge funds, stealing millions of dollars from their users to protect people who’ve used the stock market as a casino for decades. https://t.co/CGkJxVfzkv
— Rashida Tlaib (@RashidaTlaib) January 28, 2021
I wish the SEC had as much of an issue with Insider Trading as they seem to have with Outsider Trading.#RobinHood #GameStop #wallstreetbets 🚀🚀🚀
— Donald Trump Jr. (@DonaldJTrumpJr) January 28, 2021
New: A class action complaint against Robinhood has been filed, claiming it “deprived retail investors of the ability to invest in the open-market and manipulating the open-market.” https://t.co/dd41ArNVWg
— philip lewis (@Phil_Lewis_) January 28, 2021
BREAKING: Class action complaint against @RobinhoodApp filed in the southern district of NYhttps://t.co/DuGP3LIQDQ pic.twitter.com/mw82RRoA2L
— Lydia Moynihan (@LJMoynihan) January 28, 2021
A hero has filed a class action lawsuit against Robinhood! We salute you sir. pic.twitter.com/m0ISixYtlI
— Reddit Investors (@redditinvestors) January 28, 2021
The class action lawsuit is gonna be something. Also, Robinhood was working with Goldman Sachs to IPO this year… lulz. https://t.co/0E9MRk8uNG
— Mark Hemingway (@Heminator) January 28, 2021
