Stock App Robinhood Bans Trading Of Gamestop, AMC, And Other Favorites Of /r/WallStreetBets

Robinhood, a stocksharing app that's been the preferred platform of Redditors and stock market newbies amidst the recent "short-squeeze" craze that's sent Gamestop, AMC and other struggling companies' stock soaring, has restricted trading on multiple hot stocks to "closing" only.

The app stated in a blog post this morning, "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." They also banned Dogecoin after its stock rose 150%.

The move angered social media users, who felt it ran counter to the app's supposed ethos of "democratizing finance for all."

The entire Gamestop stock craze began when Redditors on /r/WallStreetBets noticed that an abundance of retail companies were being massively short sold by hedge funds and Wall Street high rollers. This means the hedge funds were borrowing stock for retail companies that appeared to be on death's door and selling their stock as a bet that their price would go down. Eventually, they thought they would buy back the stock at that low price, return it and keep the profit. Redditors noticed the game and purchased stocks in these companies in an attempt to make the stock price rise and cause a "short squeeze," forcing the short sellers to "close" their stock and make the price rise even higher.

For some, this has been a feel-good story of the common man outmaneuvering predatory finance types, as the massive surges in stocks like Gamestop meant that when short-sellers close their stock, they lose money, as its price is much higher than what they borrowed it at. Meanwhile, the Redditors of /r/WallStreetBets and anyone else who got in the game when the going was good made significant profits. In the eyes of Redditors and amateur stock enthusiasts, this was just as fair as the practices employed by hedge fund managers to make money.

However, the decision to prevent trading on these stocks by brokerages like TD Ameritrade, Schwab, and now Robinhood has struck users and onlookers as a play to put the power back into the hands of the hedge funds hemorrhaging money.

Robinhood: We’re on a mission to democratize finance for all

Also Robinhood: No No not like that

— Ż𝖊𝖊 (@ZBankEnt) January 28, 2021

this is all a great lesson in who capitalism is ultimately set up to protect https://t.co/BtqOloOhjt

— Jack Mirkinson (@jackmirkinson) January 28, 2021

Free market for whomst? https://t.co/YXgEzdsajY

— Ari Drennen (@AriDrennen) January 28, 2021

Even financial guru Ja Rule was upset.

Yo this is a fucking CRIME what @RobinhoodApp is doing DO NOT SELL!!! HOLD THE LINE… WTF 🤬

— Ja Rule (@jarule) January 28, 2021

The limiting of the Reddit-approved stocks has many seeing the situation as a "free market for me, not for thee" attitude by Robinhood and the other brokerages, and some believe that this will soon lead to government action in the form of bailout for hedge funds (while Americans still wait on the supplemental stimulus promised by the Democrats).

It's gonna be cool to watch a 2 trillion dollar hedge fund bailout get pushed through on Monday while everyone else waits for a meager stimulus check until mid-May

— j̴̢͘҉i̸̢͞z̛̛̀҉͞z̡͞w̶̵̢͜͞i̡͘t̸͝͝c̸͝h̀͏ (@fingerbIaster) January 27, 2021

the most likely policy outcome of the gamestop thing is a law guaranteeing a taxpayer bailout to any bankrupt hedge fund

— Better things are possible (@InternetHippo) January 27, 2021

"Need to be bailed out" -> Let them fail and experience the consequences of their actions. Turns out, other people actually NEED a bail out like the millions of Americans without jobs because of the pandemic - you know, the ones who pay their taxes. (just a thought) https://t.co/QCKIwmL6ex

— Andrea Rene (@andrearene) January 27, 2021

AOC compared the ongoing fracas to a casino, saying "it’s really something to see Wall Streeters with a long history of treating our economy as a casino complain about a message board of posters also treating the market as a casino." The thing about casinos, and it now seems to many, Wall Street, is that the house always wins.