Robinhood Stops Trading In Meme Stocks GameStop, AMC As Reddit Rally Begins To Unravel
After facilitating much of the mayhem, popular online brokerages Robinhood and Interactive Brokers have barred trading of the meme stocks that sparked the mind-blowing Reddit rally in shares heavily shorted by Wall Street’s elite.
“In light of recent volatility,” Robinhood said Thursday it is restricting trading of meme stocks including GameStop, AMC Entertainment, BlackBerry and Bed Bath & Beyond–all among those seeing eye-popping gains this week as Reddit traders pump up prices with massive buying.
Other stocks now barred on the platform include Koss Corporation, Express, Nokia and Naked Brand; Robinhood said it was only allowing such positions to be closed, and it did not specify how long the restrictions would last.
The broker said it has raised margin requirements for some securities, though it didn’t specify which.
Interactive Brokers has also barred options trading for many of the same stocks–AMC Entertainment, BlackBerry, Express, GameStop and Koss–allowing only liquidation for such positions; the firm is also requiring long positions to be fully covered and a 300% margin for short positions “until further notice.”
Shares of GameStop and AMC are tanking 25% and 33%, respectively, Thursday morning.
Robinhood did not immediately return a Forbes request for comment.
“We continuously monitor the markets and make changes where necessary,” Robinhood said in a statement Thursday. “In light of recent volatility, we are restricting transactions for certain securities to position closing only… Amid significant market volatility, it’s important as ever that we help customers stay informed.”
What To Watch For
“We do not believe this situation will subside until the exchanges and regulators halt or put certain symbols into liquidation only,” Interactive Brokers said in a statement Thursday, adding that it will “continue to monitor market conditions and may add or remove symbols” as it deems warranted. The SEC says it is “monitoring” the situation but hasn’t provided additional guidance.
Once again crippled by the retail-trading frenzy, major brokerages dominated the list of outages tracked by DownDetector Thursday morning, with Robinhood, E-Trade, Charles Schwab and Fidelity all among those experiencing issues around the start of trading.
According to a new report by the Harvard College Consulting Group, 31% of investors under the age of 24 are looking to “make quick cash,” while roughly the same percentage use Reddit to inform trading. Only about 58% of those are making revenue, and a large majority (65%) of those looking to “make quick cash” fail to generate anything at all.
Not Just GameStop: Here Are The Meme Stocks WallStreetBets Traders Are Pumping Up During This ‘Extremely Erratic’ Reddit Rally (Forbes)
Dow Plunges 650 Points, Posting Worst Loss In 3 Months As Reddit Traders Fuel ‘Market Nonsense’ (Forbes)