Popular trading platform Robinhood has blocked trades of GameStop, AMC, and other stock this week, after the markets fluctuated widely with Reddit-fueled purchases. GameStop surged to $376 a share on Wednesday, one of a number of stocks including BlackBerry and Nokia that saw above-average interest driving their prices sky-high.
Confusing the financial industry, the moves haven’t been based on performance of the companies but rather done “for the lulz” as Reddit might put it. Groups of Redditors have been identifying low-value stocks and then collectively pumping in cash, driving them up to unstable levels.
Meanwhile, many trading platforms saw downtime on Wednesday, as the demand for access overwhelmed apps and services. Some took the more aggressive step of temporarily halting consumer trades to allow the markets to settle somewhat. Now, Robinhood is being even more explicit.
“We continuously monitor the markets and make changes where necessary,” the company said in a statement today. “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 has carved out a name for itself among investors for being one of the easiest places to get started in trading, not least for the absence of fees it charges. That ease of entry has seen a surge in interest this week; currently, the Robinhood app is the number one download among free apps in Apple’s App Store for iOS devices, for example.
What today’s decision means is that some of the most popular stocks promoted by the r/WallStreetBets Reddit forum cannot be purchased through Robinhood. Those who currently hold stock in things like GameStop, AMC, BlackBerry, and Bed Bath & Beyond will be able to close out their positions – i.e. sell their shares – but they won’t be able to buy more.
Robinhood’s argument is that this counts as “significant market volatility” and that investors may be hurt amid the jumble. All the same, it’s unlikely to go down well among the Redditors – and others – who have been experimenting with the market this week.
Downdetector, which tracks outages across websites and services, reports some of the most popular trading platforms like TD-Ameritrade, E-Trade, Charles Schwab, and Fidelity are all experiencing connectivity issues this morning. That could prevent traders who want nothing to do with these unusual surges from gaining access to their portfolios.