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Robinhood, a popular stock trading platform among amateur investors, blocked its users from buying shares of GameStop, AMC and several other companies Thursday following sudden and sharp increases in value.
The company said it was restricting investors from acquiring the shares and allowing them only to sell. It was not immediately clear how long the restrictions would last.
Robinhood also applied the same restrictions to the stocks of fashion retailer Express, home goods retailer Bed Bath & Beyond, headphone maker Koss and tech company BlackBerry.
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“Amid significant market volatility, it’s important as ever that we help customers stay informed,” Robinhood said in a blog post, adding “we fundamentally believe that everyone should have access to financial markets.”
The move drew swift condemnation from some of the platform’s previously vocal advocates, including investors who are seeking to capitalize on a massive wave of interest in struggling companies whose stocks had been shorted by sophisticated investors.
GameStop and AMC stocks have enjoyed huge upswings in value in recent days as retail investors rallied on message board platform Reddit to drive up the price of stocks to hurt Wall Street investors, such as hedge funds, that had bet against the shares.
Retail investors take on hedge funds: Why did shares of GameStop and AMC soar?
GameStop was a place to buy video games: Now smaller investors have turned its stock into a battle royale
Robinhood has been at the center of attention during this movement in no small part because the company, which takes its name from a character who stole from the rich to give to the poor, has increased in popularity by appealing to average investors, including newcomers.
“Our mission at Robinhood is to democratize finance for all,” the company said Thursday. “We’re proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term.”
But the company’s move came under attack Thursday from a wide variety of people.
“You are scam artists. You are crooks. You deserve to be behind bars and you know it,” Barstool Sports founder and investor Dave Portnoy said on Twitter in a message directed at Robinhood.
GameStop was trading above $450 a share Thursday morning, more than double its close of $147 on Tuesday. At the start of 2021, shares of GameStop closed at $17.25 on Jan. 4. Since then, shares have surged more than 1,000%, compared with just a 1% rise in the S&P 500, the broader benchmark for most mutual funds.
The primary reason for the surge? Smaller investors who have banded together in places like Reddit, under the subreddit r/WallStreetBets.
And it’s not just GameStop. Shares of AMC Entertainment jumped more than 230% Wednesday as the Twitter trend #SaveAMC spread amid concerns the movie theater chain might file for bankruptcy due to the COVID-19 pandemic keeping moviegoers away.
Contributing: Brett Molina
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.
