Oh, the difference a day makes. Tuesday morning, retail investor trading app Robinhood was on top of the world.
It’s users were almost exclusively changing the way we look at hedge fund practices. Today? Not so much.
For reasons still unknown, each day, Robinhood has halting trading of various stocks despite hedge funds still being able to trade. TD Ameritrade and others followed suit. The problem, is this essentially creates a different standard for Wall Street vs the American people.
It’s such a problem, in fact, that Sen. Ted Cruz (R-TX) and U.S. Rep. Alexandria Ocasio Cortez (D-CA), agree on something. That something is the need for congressional hearings on what has taken place.
Fully agree. 👇 https://t.co/rW38zfLYGh
— Ted Cruz (@tedcruz) January 28, 2021
She very quickly shot down his support, however, that they’re on the same page is still quite a statement.
I am happy to work with Republicans on this issue where there’s common ground, but you almost had me murdered 3 weeks ago so you can sit this one out.
Happy to work w/ almost any other GOP that aren’t trying to get me killed.
In the meantime if you want to help, you can resign. https://t.co/4mVREbaqqm
— Alexandria Ocasio-Cortez (@AOC) January 28, 2021
Many other lawmakers have come forward and made similar statements, but nothing has been placed on the Congressional Calendar as of press time.
Even Tesla founder Elon Musk criticized the role of stock shorting in society.
u can’t sell houses u don’t own
u can’t sell cars u don’t own
u *can* sell stock u don’t own!?
this is bs – shorting is a scam
legal only for vestigial reasons
— Elon Musk (@elonmusk) January 28, 2021
The whole debacle stems from a movement of retail investors that developed Monday and has carried through the week. Reddit users took it into their own hands to fight back against hedge fund managers profiting on failing American companies. By driving the stock price up of largely insolvent companies, market speculators are left having to purchase the stock at a higher price.
Robinhood issued a statement via a company blog with regard to their stance on the decision.
“We continuously monitor the markets and make changes where necessary,” blog post states. “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities.”
As recently as January 12, stock for video game retailer GameStop ($GME) was trading in the sub-$20 per share range. Wednesday, it peaked at $347.51. AMC Theaters ($AMC) also saw a substantial boost from trading in the sub-$5 range to start the week and spiking Wednesday to near $20.
The grassroots movement quickly got the attention of Wall Street with congressional representatives and even cabinet members weighing in on the disruptive campaign.
Looks like Robinhood just stopped supporting GameStop, AMC, Blackberry, and Nokia. Users can close out positions but can’t buy more pic.twitter.com/ZOE8NJuVum
— Josh Billinson (@jbillinson) January 28, 2021
Old Robin Hood: Stole from the very rich people to help the poor
New Robin Hood: Protects the rich from the poor lol
— The Real Straz (@RealStraz) January 28, 2021
It’s just funny because the story of Robin Hood is the opposite of the corruption they pulled today 😂 #sellouts
— Jiggy (@jiggyputts) January 28, 2021
According to National Review, a class action suit against Robinhood has already been filed.