Trading app Robinhood has restricted trading on several “meme stocks” due to market volatility caused by the subreddit r/wallstreetbets.
In a statement released Thursday morning, Robinhood announced that it is restricting transactions for $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK, “in light of recent volatility.” Several of these stocks, including AMC, Blackberry, Bed Bath and Beyond, Express and Nokia, are all down anywhere from 10% to 25% Thursday morning after the restrictions.
“We’re committed to helping customers navigate this uncertainty,” the statement reads. “We fundamentally believe that everyone should have access to financial markets.
Robinhood is hiding search results on its app for the stocks in question, as well as some others like $CTRM. Some orders for certain “meme stocks” made before market open Thursday also appear to be getting cancelled. I know, because I tried to order some stock in my own Robinhood account last night, and my orders were cancelled or filled seemingly at random. Ethically speaking, I'm not in any possession of material information or reporting that could affect the stock price — certainly not in a market like this — and if I were, I would disclose it in any coverage I do about these companies, as I am doing so here. I have since exited any trades that went through. It’s unclear if these cancellations are part of the trading restrictions or if they are due to heavy load on Robinhood’s servers. Notifications about cancellations are being sent out with text claiming that the user cancelled the order themselves.
Wallstreetbets had not taken well to the news and users were urging each other to hold or continue buying through other means. “Robinhood will never see a dime from me again,” wrote one user in what’s become the top comment on a daily discussion thread. “When all of this is over I'm withdrawing all of my funds and taking my shit elsewhere. Fuck them. I hope it was worth it because they just tanked their company.”
One of the top posts on the subreddit is a tweet from Richard Bengston, one of the owners of esports organization FaZe Clan. “Robinhood legitimately hid $NOK $AMC $GME and $NAKD from search. Internet psychology 101, this will only make things worse for you Wall Street,” Bengston wrote. “Things are getting blown the fuck up today. Take all the cash you can afford to lose and buy buy buy.”
Investors and financial figures across the internet are also criticizing Robinhood’s decision to restrictions trading. Twitch.tv co-founder Justin Kan questioned why anyone should trust Robinhood again and urged Alexandra Ocasio-Cortez to investigate the app’s actions. Mark Cuban questioned whether Robinhood has the financial ability to support trades on this scale, or if they’re losing money on the orders.
Dave Portnoy, CEO of Barstool, has been especially critical of the app. “I will burn @RobinhoodApp to the ground if they shut down free market trading,” reads one tweet. “Somebody is going to have to explain to me in what world @RobinhoodApp and others literally trying to force a crash by closing the market is fair? They should all be in jail.”
Robinhood was the primary vehicle by which r/wallstreetbets users accessed the stock market, and was deeply embedded in the subreddit’s culture. A Robinhood user was almost synonymous with a r/wallstreetbets user on the subreddit. At present, users are angrily calling for the use of other platforms like TradeZer0 and Charles Schwab. Several of the top-rated posts on the subreddit at the moment are full of users calling for a class action lawsuit against Robinhood for market manipulation.
