Robinhood Halts Trading Of GameStop, AMC As Wall Street Backlash Continues

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Dylan Housman Deputy News Editor
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Popular investing app Robinhood blocked users from purchasing shares of GameStop, AMC, and several other companies Thursday morning due to “volatility.”

Shares of GameStop rose to over $500 in pre-market trading Thursday morning as retail investors continued to drive the price up against the wishes of many hedge funds and other institutional investors. The full list of stocks Robinhood halted purchasing of includes GameStop, AMC, Blackberry, Nokia, Bed Bath & Beyond, Express Inc., KOSS Corp, and Naked Brand, according to CNBC.

All of those equities were targeted by online retail investors in the community known as “WallStreetBets” (WSB), which sent shockwaves through the finance world in recent days by launching GameStop’s share price up more than 600%, costing hedge funds billions of dollars in the process. (RELATED: How A Rabble Of Anonymous Redditors Stuck A Thumb In Wall Street’s Eye)

GameStop stock had been widely shorted — meaning investors were betting the company’s share price would go down — by hedge funds and other Wall Street firms in recent months. This was largely due to expectations that the company would struggle to adapt to the video game industry’s shift to digital downloads over selling physical video game discs. By having the price shoot up through stock purchases, WSB forced those “short sellers” to take big losses on the stock.

Robinhood, a popular platform choice for WSB users due to its simple interface and free trading, describes itself as “democratizing finance for all.” The app, named after the English folklore character known for redistributing resources from the wealthy to the needy, is now under fire for appearing to aid institutional investors over individual traders. (RELATED: Everyone’s Laughing About GameStop, And Perhaps Justifiably So. But There’s A Flip Side To The Story)

A number of high-level figures in the finance world have called on regulators and investing platforms to get the volatile situation caused by WSB under control.

“Anytime there’s departures from fundamentals and volatility like this there’s the opportunity for people to get really hurt, and there’s the opportunity for fraudsters and bad actors to take advantage of it,” former SEC Chairman Jay Clayton told CNBC’s Squawk Box.

NASDAQ CEO Adena Friedman suggested her exchange may need to halt trading to allow Wall Street to “recalibrate their positions” due to the volatility caused by WSB. Meanwhile, Robinhood is now being flooded with negative reviews after previously being the number one app on Apple’s App Store.