Robinhood restricts trades on GameStop, AMC stock as Reddit investors push shares higher
following sudden and sharp increases in value.
The company said it was restricting investors from acquiring the shares and allowing them only to sell. It was not immediately clear how long the restrictions would last.
Robinhood also applied the same restrictions to the stocks of fashion retailer Express, home goods retailer Bed Bath Beyond, headphone maker Koss and tech company BlackBerry.
“Amid significant market volatility, it’s important as ever that we help customers stay informed,” Robinhood said in a blog post, adding “we fundamentally believe that everyone should have access to financial markets.”
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.
Why did shares of GameStop and AMC soar?
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Robinhood has been at the center of attention during this movement in no small part because the company, which takes its name from a character who stole from the rich to give to the poor, has increased in popularity by appealing to average investors, including newcomers.
“Our mission at Robinhood is to democratize finance for all,” the company said Thursday. “We’re proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term.”
But the company’s move came under attack Thursday from a wide variety of people.
“You are scam artists. You are crooks. You deserve to be behind bars and you know it,” Barstool Sports founder and investor Dave Portnoy said on Twitter in a message directed at Robinhood.
GameStop was trading above $450 a share Thursday morning, more than double its close of $147 on Tuesday. At the start of 2021, shares of GameStop closed at $17.25 on Jan. 4. Since then, shares have surged more than 1,000%, compared with just a 1% rise in the SP 500, the broader benchmark for most mutual funds.
The primary reason for the surge? Smaller investors who have banded together in places like Reddit, under the subreddit r/WallStreetBets.
And it’s not just GameStop. Shares of AMC Entertainment jumped more than 230% Wednesday as the Twitter trend #SaveAMC spread amid concerns the movie theater chain might file for bankruptcy due to the COVID-19 pandemic keeping moviegoers away.
Contributing: Brett Molina
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.