Amateur investors who had been having a grand old time inflating the share price of gaming retail chain Gamestop (which made a lot of them quite a bit of money), while thumbing a collective nose at Wall Street in the process, found their activities cut short yesterday when several amateur trading apps banned them from buying Gamestop shares.
Well, it was too much fun to last, wasn’t it?
According to a report on The Guardian the RobinHood amateur trading app (among others), moved to prevent users from buying up Gamestop stock, along with the stock of seven other companies.
RobinHood was one of the key apps that a group of Reddit traders from the r/wallstreetbets community used to, not only buy stock, but spread the message to other users. This had resulted in Gamestop’s stock share price soaring, which in turn had cost several hedge funds who were ‘shorting’ the retail chain billions of dollars.
The result was that Gamestop’s stock surge ground to an almost immediate halt and then started falling like a proverbial lead balloon, ending yesterday’s trading at around 44% lower than it began.
The backlash begins
Naturally, the move has prompted a massive backlash with amateur investors (and presumably interested onlookers) taking to social media with all sorts of accusations and conspiracy theories. Top among them was the notion that the hedge funds affected had used their influence to shut down the Wall Street rebellion. CNN reports that one user has taken things a bit further and filed a class-action lawsuit against RobinHood, claiming its attempting to rig the market.
“Robinhood’s actions were done purposefully and knowingly to manipulate the market for the benefit of people and financial institutions who were not Robinhood’s customers,” the lawsuit states.
RobinHood for its part hasn’t responded to CNN’s request for comment, but it has taken to deleting negative reviews of its app, which was review bombed all the way down to a one-star-rating. It also announced that limited trading would be allowed to resume on its platform.