Popular stock trading app Robinhood got a lot of flack from its users last year for service outages and a wide array of issues. Now, the company appears to be starting the year on the wrong note as a voluntary trading halt has drawn customers’ ire once more.
What’s Up at GameStop?
Robinhood made the unpopular decision to join other trading platforms in suspending trading for GameStop, the famous video game retailer. Right now, investors who bought GameStop on Robinhood can’t buy more. They can only sell. The decision has left many furious at the company, claiming that the company appears to be part of some major Wall Street conspiracy. The trading app has received over 100,000 one-star reviews in the last 24 hours.
after delisting GameStop and AMC, Robinhood has gotten over 100,000 1 star reviews in one hour on the app store, now set with a 1 rating. they deserve it pic.twitter.com/eDNDuPrj8r
— Rod Breslau (@Slasher) January 28, 2021
The GameStop saga has been the talk of the financial industry for a couple of days. The company, which has joined the ranks of old-timey stocks left in the dust, suddenly went on a parabolic run earlier this month after Redditors pooled their investing might and revived it.
The action was in response to revelations that New York-based investment management firm Melvin Capital had sized up a significant short position in the company.
Looks like you can only sell, and not buy, GME and AMC on Robinhood now. pic.twitter.com/fBOi1A3aMG
— eric.eth (@econoar) January 28, 2021
In a quest to stick it to a powerful hedge fund, Redditors managed to buy up huge chunks of the company’s stock, sending it surging from $20 on January 12 to $358 as of yesterday. While the stock stands at $290 at press time, this is still a significant gain.
Many have praised Redditors’ action, drawing comparisons to the crypto space and its mission to fight the institutional powers. Since the action, Melvin Capital has been forced to close its short position and has had to seek additional funding to keep the lights on. Robinhood users are also showing their ire.
Wall Street Fights Back
As for GameStop, the company and its investors had their celebrations cut short after several trading platforms began delisting its stock. As of yesterday, several brokerage platforms – including TD Ameritrade – confirmed that they would restrict trades. Adena Friedman, the chief executive of the NASDAQ exchange, also claimed that they would monitor similar stocks with “unusual” activity.
Robinhood followed in the footsteps of its competitors, and the backlash has been swift. Meltem Demirors, an executive at investment firm CoinShares, called the company a clown show. At the same time, another Twitter user drew a clever contrast between it and the titular Robin Hood character, who stole from the rich and gave to the poor.
Delisting GameStop trading is just the latest in problems that Robinhood will have to worry about. The company already dealt with a slew of service outages last year, threatening its ability to expand its operations. While this self-own will pass, the firm can’t seem to do anything right these days.