The world loves an underdog story, like when an average Joe steps up for all the little people out there who never get a break. That’s exactly what happened this week as a group of social media users banded together to completely destroy several Wall Street hedge funds.
It started on Reddit when some users noticed that stocks of Gamestop were being “shorted” by several of these seemingly invincible capital firms up to 140% of the total stock available. This meant that individual users with just a couple thousand, or even hundreds of dollars could go all in and “squeeze” these hedge funds by causing the price to skyrocket, forcing the funds to purchase more shares at a much higher price than they ever anticipated.
This has put companies like Melvin Capitol on the brink of total destruction, so you can imagine what happened when a bunch of millionaires starting going broke by losing at their own game.
GameStop’s stock has continued to make big moves, briefly crossing $450 a share on Thursday, fueled by Reddit users collectively taking on Wall Street. But individual investors looking to make trades have faced multiple issues on trading sites and apps over recent days, with many experiencing service disruptions, according to Bloomberg. The frenzy over GameStop stock has led to TD Ameritrade and Robinhood restricting new purchases of particular stocks (GameStop and AMC, among others). It also led to the Wall Street Bets subreddit temporarily getting locked and a Discord server getting shut down for violating terms of service.
On Thursday morning, Twitter users began posting screenshots of their Robinhood app that showed a message appended to the stocks of GameStop, AMC, Nokia and Bed, Bath and Beyond: “This stock is not supported on Robinhood.”
Robinhood explained the move in a blog post Thursday morning, just before the stock exchanges opened: “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK.”
The move had millions of social media users looking for blood, declaring that they would not only cease to use Robinhood but would also file several class-action lawsuits against the mobile brokerage app.