Robinhood Lifts Restrictions on GameStop Trading
Robinhood Markets, operator of the trading platform at the center of the GameStop stock market storm, has lifted trading restrictions on all stocks, including GME and AMC.
This move comes eight days after the company’s controversial decision to block purchases of GameStop, AMC, and other stocks. That action led to an enormous backlash in online communities and a review-bombing campaign that saw Robinhood drop to a one-star rating on many platforms. Google alone deleted more than 100,000 negative reviews to salvage the trading platform’s rating.
Other consequences weren’t so easily reversed. At the height of the trading frenzy, Robinhood had to draw on bank credit lines to secure enough cash to clear trades.
The trading block led to a huge drop in GameStop stock prices because potential buyers could not execute trades on the Robinhood website.
Only a day after the January 29 decision to block GameStop trading, Robinhood announced it would resume trading the stocks in a limited capacity. This came after a $1 billion cash infusion from investors looking to safeguard traders.
On February 4, Robinhood announced that it would remove volume restrictions on all stock trades. GameStop stock prices, which dropped during the trading blackout, began rising again.
It remains to be seen whether Robinhood will manage to restore its tarnished reputation. While the GameStop debacle was the worst PR disaster the popular trading platform has faced, it isn’t the first time Robinhood has faced criticism. In December 2020, the platform came under scrutiny from securities regulators. Investigators felt Robinhood was guilty of gamifying investing because the website and mobile app made investing similar to a video game, which lured users and made them lose sight of the actual risks involved. Those investigations came after Robinhood paid a $65 million settlement for misleading customers about its revenue sources.
Whatever Robinhood’s fate may be, questions that arose during the GameStop crisis will remain – especially questions about how free the market is, the long odds facing retail investors, and whether big players are illegally manipulating the market.