Robinhood has weighed in on the war on Wall Street, blocking buys of GameStop, AMC, Blackberry and others, and facing backlash for it.
Day traders have been waging war against Wall Street, targeting stocks institutional investors have recommended shorting. The traders have been using Reddit to encourage others to buy those stocks, pumping them to record heights. GameStop surged as high as $247 from the $18 it was sitting at a couple of weeks ago.
The end result has been staggering losses by Wall Street investors who had shorted those stocks, in many cases being forced to buy them back at much higher prices. The situation has even caught the attention of the White House and Treasury Department.
Meanwhile, Wall Street investors have denounced the phenomenon, saying it’s not based on facts or the merits of the companies’ performance. Instead, the situation seems to be the latest example of community activism, fueled by frustration over how established institutions have done business.
Reddit co-founder Alexis Ohanian, Sr. made that point on Twitter:
this feels really personal for a LOT of people, tracing back to the 2008 crisis & recession in particular. I believe this has snowballed into something bigger and unprecedented. As I've said for over a decade now: Community is still vastly undervalued.
— Alexis Ohanian Sr. 7️⃣7️⃣6️⃣ (@alexisohanian) January 28, 2021
Stock trading app Robinhood has taken action, blocking trades of $AAL, $AMC, $BB, $BBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG. Needless to say, users are outraged, with some filing SEC complaints and others jumping ship for competing platforms, such as CashApp.
Robinhood may find itself reaping the same collective whirlwind Wall Street has been on the receiving end of, hurting its own business.