Robinhood app reduces significant part of restrictions for share trading amid GameStop chaos
Sputnik news agency and radio 03:43 GMT 01.02.2021
Earlier, online investment platform Robinhood restricted certain stock trades after a group of independent retail traders conversing in a Reddit chat group purchased GameStop call options, causing the company's once slumping shares to skyrocket, resulting a sharp drop in the value of several Wall Street institutional investment houses.
The Robinhood trading platform, popular with amateur investors communication with each other to raise the value of GameStop shares, has removed some of its restrictions for buying certain shares. Stocks of 42 companies are again available for purchase, according to Robinhood new blog post.
Nevertheless, the limits remain on GameStop, Koss Corporation, AMC Entertainment Holdings, Express Inc., Naked Brands Group, Genius Brands International, BlackBerry Limited and Nokia Corp. As a Robinhood statement claimed, a certain amount of their shares are options contracts available for buying, including shares and options contracts that investors already own.
At the same time the trading platform notes that investor shares that are above the limit will not be sold or closed.
"If you already hold a greater number of shares or contracts than the limits listed above, your positions will not be sold or closed. However, you will not be able to open more positions of each of these securities unless you sell enough of your holdings such that you are below the respective limit," the statement reads.
Earlier, Robinhood temporarily banned some operations with shares of certain companies, citing high market volatility that they suggested could harm investors. Some shares, including GameStop, AMC Entertainment Holdings, American Airlines, Bed Bath & Beyond, BlackBerry Limited, Express Inc., Koss Corp., Nokia Corp., Naked Brands Group, Tootise Roll, and Trivago, were available only to sell as a means of causing the boosted prices to drop.
The move caused outrage among users of the online trading platform. Some have filed a class-action lawsuit against the company, claiming that it has violated the terms of its own contract.
The sharp GameStop rise and subsequent media attention drew the notice of Democrat and Republican lawmakers who called for an investigation into the trading app’s policy. New York Attorney General Leticia James earlier announced that she would launch an inquiry. Democratic Congresswoman Alexandria Ocasio-Cortez expressed her support for hearings against Robinhood, saying that committee investigators should examine any retail services freezing stock purchases in the course of potential investigations - especially those "allowing sales, but freezing purchases."
Earlier this week, a group of Reddit users participating in a subreddit called WallStreetBets encouraged each other to buy GameStop stock, after it had earlier been gradually dropping. GameStop stock, as well as that of some other companies, eventually skyrocketed, causing a sharp drop in the value of institutional short-seller portfolios, who had earlier crowed about making a profit on the decreasing value of the brick and mortar chain.
According to data platform Statista, GameStop shares were worth just over $17 each in early January. By 27 January they had soared to $347, stopping at the close of trading this week to $193.6. GameStop owns retail shops and sells consoles, game and movie discs, and other goods in brick-and-mortar stores. In recent years, due to competition with online trading, the firm's sales have consistently dropped.
