WASHINGTON, D. C., DPA – Users of a popular US platform for trading stocks are in an uproar after Robinhood banned the buying of shares in GameStop and other beaten-down companies that registered sky-high price moves on speculative bets.
Other stocks hit by the sudden rule include movie theatre chain AMC, Blackberry and Nokia.
All the stocks are benefiting from a pile-in, driven in large part by social media users on Reddit and other forums who are buying up shares and pushing up prices, in what started as a move against hedge funds who were betting against these companies.
The short-sellers at the funds have taken hits worth billions of dollars this week but the retail investors are also at risk of losing money if and when the share prices of these companies come back to earth – which is likely to happen sooner or later.
Robinhood is not alone in banning the trades.
Broadcaster CNBC reported that Interactive Brokers also made the move.
“Either @RobinhoodApp allows free trading like they say they do or they die. It’s really that simple,” said Dave Portnoy, the founder of Barstool Sports, a popular website who is influential online as an amateur stock trader.
There is growing concern that the frothiness around the once-unloved stocks – Gamestop was trading below $US20 a share last month and is now at $US418 while AMC moved from $US2 to $US20 a share at one point – is a sign of a wider stock market bubble.