Robinhood Blocks Buying in GameStop, AMC, and Other Stocks. Other Brokers Also Add Guardrails.
3 min
Investing app Robinhood blocked access to GameStop and other highflying names on Thursday as trading surged among retail users.
The move comes after GameStop (GME) stock has shot higher over the past week, inspiring a short squeeze. The action — driven by retail traders often using options — has spread to other names like BlackBerry (BB), AMC Entertainment Holdings (AMC), and Bed Bath & Beyond (BBBY). Several of those stocks were falling in premarket trading after enormous run-ups in the past few days.
Users began reporting that they couldn’t trade GameStop and other stocks on Thursday. They got a message that “This stock is not supported on Robinhood.”
In a statement on Thursday, Robinhood detailed which stocks now had restrictions. “In light of recent volatility, we are restricting transactions for certain securities to position closing only,” the company said. These include AMC Entertainment, BlackBerry, Bed Bath & Beyond, Express (EXPR), GameStop, Koss (Koss), Naked Brand Group (NAKD), and Nokia (NOK).
“We also raised margin requirements for certain securities,” Robinhood said. The trading platform is raising margin requirements for investors in GameStop and AMC to 100%, Robinhood told Barron’s on Wednesday.
On Thursday morning, Robinhood was also reporting outages.
Other brokers have instituted similar restrictions. Interactive Brokers (IBKR) on Wednesday put AMC, BlackBerry, Express, GameStop, and Koss option trading into liquidation “due to the extraordinary volatility in the markets,” the company said.
“In addition, long stock positions will require 100% margin and short stock positions will require 300% margin until further notice,” the company said. “We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only. We will continue to monitor market conditions and may add or remove symbols as may be warranted.”
TD Ameritrade (AMTD) also placed restrictions on some transactions in GameStop and other securities, the broker said on Wednesday. A spokeswoman didn’t specify exactly what the company was doing but said it could include “actions like increasing margin requirements, or limiting certain types of transactions, like short sales and those that may involve unlimited risk. It is not uncommon for us to make such decisions, which we consider on an individual basis, in the interest of mitigating risk.”
“We have been adjusting our requirements for several days as we continued to see trends indicating unusual volume in an unprecedented market environment, which appear to be divorced from traditional market fundamentals,” the company said. “We have made what we believe to be prudent and appropriate decisions to place some limits on certain transactions for certain securities.”
And fast-growing privately held broker Webull said it was limiting some activities, too.
“Webull has been very successful in limiting our intraday risk during the course of these events by not allowing any short positions in these volatile names since as early as Friday of last week,” CEO Anthony Denier told Barron’s. “Trading has been open for these stocks and uninterrupted amidst this volatility and the only new restrictions we have placed is not allowing market orders opening of new multi-leg option strategy positions.”
Robinhood has grown faster than the rest of the industry over the past year, attracting younger investors. Last year, it said it had more than 13 million account-holders, adding 3 million from January until May. The privately held broker was sued last month by a Massachusetts regulator on allegations that it encourages risky investing among its clientele. The company denied those allegations and said it does not recommend stocks.
On Wednesday night, Robinhood sent a notice to users directing them to educational products in light of the recent volatility.
One trader who has made money in the GameStop trade through his Webull account was frustrated by the new limits.
“It’s one thing if I had a pattern of misconduct, or a lot of violations. It’s another thing for you to tell me that you can’t trade this stock because we don’t like what’s happening to it,” Brandon Luczek, a 28-year-old who lives in Virginia, told Barron’s on Wednesday night. “That’s not for you to decide. I have my own personal risk tolerance.”
Others on reddit’s wallstreetbets forum lashed out at Robinhood. “How in the hell is this legal? They are tanking our legitimately bought and held stocks/options by arbitrarily restricting trading,” one wrote.
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Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
After appeals to cashed-up Australians to stop spending, there’s a little inflationary relief in sight
2 min
The rate of inflation in Australia has fallen to 4.9 percent, according to data from the Consumer Price Index. Inflation is down from 5.6 percent in September and a peak of 8.4 percent in December 2022.
The housing, transport and food and non-alcoholic beverages sectors were the strongest contributors to the October increase, which is consistent with trends shown in ABS data from September.
“CPI inflation is often impacted by items with volatile price changes like Automotive fuel, Fruit and vegetables, and Holiday travel,” said acting head of price statistics at the ABS, Leigh Merrington. “It can be helpful to exclude these items from the headline CPI to provide a view of underlying inflation.”
Food and non-alcoholic beverages rose from 4.7 percent in September to 5.3 percent in the 12 months to October, driven by the rising prices of melons and bananas.
In good news for would-be home builders, new dwelling prices rose 4.7 percent, the lowest annual rise since August 2021, as a result of easing material supply conditions.
While the ABS noted that electricity prices rose 10.1 percent in the year to October, Mr Merrington said it could have been worse, if not for the introduction of the Energy Bill Relief Fund.
“Electricity prices have risen 8.4 per cent since June 2023. Excluding the rebates, Electricity prices would have increased 18.8 per cent over this period,” Mr Merrington said.
The inflation figures come ahead of the final meeting for the year of the RBA Board next Tuesday. The board raised the cash rate by 25 basis points at the November meeting following an increase in the rate of inflation in September.
Consumers are going to gravitate toward applications powered by the buzzy new technology, analyst Michael Wolf predicts
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
