- Robinhood users are furious after the app stopped allowing users to buy GameStop stock on Thursday morning.
- The stock-trading app was flooded with one-star reviews on the Google Play store, which lowered its user rating.
- Big names like Rep. Alexandria Ocasio-Cortez, Mark Cuban, and Dave Portnoy all publicly criticised the company.
- Visit Business Insider’s homepage for more stories.
Robinhood users are coming for the trading app’s head.
The trading platform stopped allowing users to buy GameStop stock on Thursday morning, allowing users to sell only, following weeks of huge gains â€” from being below $US5 in late 2020 to over $US450 per share on Thursday morning.
Users of the Reddit forum r/wallstreetbets encouraged each other to bid up GameStop’s stock price, thus causing a short squeeze on the hedge funds betting against GameStop’s stock value. As a result, those short sellers lost more than $US1 billion in a single day, while the company’s stock value jumped by hundreds of dollars per share.
On Thursday morning, Robinhood cut off users from trading GameStop stock (and a handful of other companies), citing “significant market volatility.”
That decision caused a massive outcry on social media.
“Robinhood has disabled trading in $AMC $GME $NOK etc, proving that the ‘little guy’ was never allowed to win in a ‘free market,'” the popular newsletter writer Joe Pompliano said in a tweet. “What a joke.”
Unless the hedge funds that pay you $600M+ annually tell you not to, right? pic.twitter.com/suWywja2Xd
— Joe Pompliano (@JoePompliano) January 28, 2021
Definitely ceasing my usage of @RobinhoodApp after this. What they're doing is criminal and I'm ready to jump on that lawsuit.
— Drew Welker (@dwelkeroutdoors) January 28, 2021
I fixed it for you pic.twitter.com/WE8xtwGl19
— Mike McLean (@mikemcln) January 28, 2021
The Robinhood app listing received an influx of one-star reviews on the Google Play store, causing the app to average the lowest rating.
And members of Wall Street Bets threatened to file a class-action lawsuit against Robinhood, alleging market manipulation.
“Allowing people to only sell is the definition of market manipulation,” one post on Wall Street Bets said. “A class action must be started, Robinhood has made plenty of money off selling info about our trades to the hedge funds to be able to pay out a little for causing people to lose money now.”
Robinhood, founded in 2013 by the Stanford graduates Baiju Bhatt and Vladimir Tenev, allows users to trade stocks without commission.
“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,” the firm said in a blog post.
Instead of taking commissions on stock trades, the company says it earns revenue through a variety of other means, from financial services to a membership program, Robinhood Gold.
Users aren’t the only ones criticising Robinhood publicly.
The billionaire Mark Cuban questioned why Robinhood restricted trading, tweeting: “So are @robinhoodapp and @IBKR ending trading in #wallstreetbets stocks because they are losing their arse on these trades? Or maybe they don’t have the cash to enable the trades at this scale? Anyone have any insight on their economics?”
So are @robinhoodapp and @IBKR ending trading in #wallstreetbets stocks because they are losing their ass on these trades ? Or maybe they dont have the cash to enable the trades at this scale ? Anyone have any insight on their economics ?
— Mark Cuban (@mcuban) January 28, 2021
Barstool Sports, along with the blog’s founder, Dave Portnoy, declared “war” on Robinhood.
“You are scam artists,” Portnoy tweeted in response to Robinhood’s announcement on restricting trading. “You are crooks. You deserve to be behind bars and you know it.”
— Barstool Sports (@barstoolsports) January 28, 2021
Rep. Alexandria Ocasio-Cortez said Robinhood’s actions were “unacceptable” and called for “a hearing if necessary” to determine why the company chose to “block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.”
Sen. Ted Cruz seconded Ocasio-Cortez’s tweet. “Fully agree,”he said.
Pulte Capital CEO Bill Pulte, a philanthropist, weighed in as well.
“This is what you call rich people trying to confuse you with fancy words,” he tweeted in response to Robinhood’s statement on why it was restricting stock trades of GameStop.
Robinhood representatives didn’t immediately respond to a request for comment.