Robinhood To Lift Restrictions on GameStop Trading
Robinhood Markets has announced that its online trading platform will resume accepting trades of GameStop and other highly volatile stocks, effective January 29.
The company suspended GameStop trading on its platform January 28 following a storm of protest trades that were inspired by posts in a Reddit discussion group. Reddit members and other small investors deliberately drove GameStop’s price up in protest against institutional investors who had shorted the stock. Their actions caused the stock price to rise, potentially costing short-sellers more than $70 billion.
Robinhood’s decision to halt trading GameStop and a dozen other highly active stocks caused outrage in the online community. GameStop’s price plunged 55% as short-sellers threatened legal action against Reddit members who participated in the protest investments.
Another suit threatens Robinhood itself. Users claim that suspending GameStop trading constituted market manipulation in favor of large hedge funds.
Robinhood announced that it would restore GameStop and the other stocks to its platform following a cash injection of more than $1 billion from investors. GameStop’s price soared 100% higher following Robinhood CEO Vlad Tenev’s tweet announcing the company’s intention.
GameStop’s share price stood at $193.60 on January 29 despite the previous day’s losses. The price is up nearly 950% over its January 1 share price of $20.
The White House is monitoring the crisis, according to Press Secretary Jen Psaki. Strange bedfellows Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ted Cruz (R-Texas) have united in criticizing Robinhood’s management of the crisis.
Amateur investors from Reddit say they do not plan to back off. Fed up with increasing inequality, they have vowed to beat Wall Street giants at their own game.