Robinhood Opens Limited Buys For GameStop, AMC, Several Others

In the midst of a stock surge that has taken the financial world by storm, the popular stock-trading site Robinhood temporarily restricted trades of the key stocks at the center of the story. The move prompted backlash from lawmakers, app users, and baffled onlookers. Robinhood has since reopened sales of those shares, but is keeping purchase quantities extremely low. If you didn't buy a healthy chunk of the stocks already, you likely won't be able to do so now.

GameStop stock dropped more than 50% just a few hours after the restrictions began, and then rose and fell throughout the day yesterday. AMC similarly fell by roughly 50% at its peak. At different points GameStop was as high as $470 and reached a low of $131. Robinhood promised limited sales to return today, and the GameStop stock closed at approximately $325 per share.

This comes as the Robinhood app itself is surging in popularity, along with Reddit where the trades are being organized. Robinhood has issued a statement on its policy, chalking it up to monitoring for market volatility.

"We continuously monitor the markets and make changes where necessary," the company stated. "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 blog has since updated with a table of stocks with limited purchase options, many of them limiting the number of shares that can be bought at once. GameStop is limited to just one share, as is AMC. Several others have been added as well, including the stocks for American Airlines (AAL), General Motors (GM), Moderna (MRNA), and Sirius XM (XM). Cryptocurrency purchases were also tweaked, with instant deposits not being eligible for purchasing it.

In an interview with Reuters, Robinhood CEO Vladimir Tenev said the restrictions weren't placed due to any direction from hedge fund managers. Instead, he said, the company did it to protect its own financial obligations as a brokerage firm. He also said he should have "been out there a little bit sooner" to respond to customer concerns.

This followed a similar stoppage from TD Ameritrade, along with one from E-Trade. The move has reportedly already prompted a class-action suit filed in the southern district of New York, according to Fox Business reporter Lydia Moynihan.

There has been some calling action to be taken as the value of GameStop and AMC inflate to much higher values than normal. This is being organized by the WallStreetBets subreddit, which is intentionally taking on hedge funds and short-sellers. The subreddit briefly went private during the whole debacle. The subreddit has moved on to AMC in recent days, and the entire situation has even garnered a response from the White House.

Industry analyst Michael Pachter weighed in regarding the halting of trades, coming out against it because the Reddit users are not relying on "material nonpublic information" or making false claims. Those factors would make them potentially guilty of insider trading, but instead the entire scheme was hatched on a public forum where anyone can view it. He said restricting their access is "problematic."

The calls for action and others have also been met with criticism, as it's perceived as a move to protect hedge funds from losing out. This has drawn comparisons to the Wall Street bailout. The Robinhood app was heavily review-bombed, but Gizmodo reports that Google deleted 100,000 negative reviews.

The move has also gained criticism from some members of Congress. Rashida Tlaib said that blocking the ability to trade is "stealing millions of dollars from their users" to protect hedge funds, while Ted Lieu said it looks like "fear of too much profit going to ordinary investors." Alexandria Ocasio-Cortez criticized the move as "unacceptable" and said she would support a hearing in her capacity as a member of the Financial Services Committee. Her statement received a tweet of support from Senator Ted Cruz, usually an ideological opponent.

AOC has also said she'll be hosting a Twitch stream at 8:30 PM to discuss the day's events with GameStop stock.

The story has been gaining attention throughout the financial world in recent days, leading to a surge of popularity in all of the surrounding applications. As analyst Daniel Ahmad pointed out, the two most downloaded apps right now are Robinhood and Reddit.

Competing stock trading services Webull, M1, and Public all temporarily suspended these trades as well, but has since reinstated them, reports TechCrunch. In an interview, the CEO of Webull claimed that the move was due to external factors beyond its control.