Angry Investors Question Robinhood’s Motives

Robinhood Faces Controversy Due to the Removal of Select Stocks

Shares+in+GameStop+%28GME%29+have+seen+a+monumental+increase+in+value+in+recent+weeks%2C+fueled+by+retail+traders+betting+against+short+sellers.

Shares in GameStop (GME) have seen a monumental increase in value in recent weeks, fueled by retail traders betting against short sellers.

Murray NEB.-In 2013, a company by the name of Robinhood was founded. Its core principles were simplicity and the ability for anyone to invest in the free market. Today, however, the ability to invest in the free market is being limited by Robinhood. On June 19th, GameStop was selling shares for as low as $4 a share. On January 28th, shares skyrocketed to a whopping $369! A subreddit group known as WallStreetBets is responsible for the stock growth of GameStop and other companies like AMC and Black Berry. The members of this group simply banded together to increase the stock price and eliminate stock shorters who use the strategy of short selling.

According to Investopedia, short selling is when a position is opened by borrowing shares of a stock or other asset that the investor believes will decrease in value by a set future date—the expiration date. The investor then sells these borrowed shares to buyers willing to pay the market price. Before the borrowed shares must be returned, the trader is betting that the price will continue to decline and they can purchase them at a lower cost. The risk of loss on a short sale is theoretically unlimited, since the price of any asset can climb to infinity.

Due to the amount of investors short selling GameStop, many short sellers lost an absurd amount of money while others gained a colossal amount. On January 28th, Robinhood restricted GameStop, AMC and Koss from its app. On top of restricting people’s ability to trade, this caused GameStop to lose value in its shares. This ultimately helps the corrupted suits on Wall Street and practically helps benefit their hedge funds. Many users and celebrities are left questioning “How is this legal?”

Mark Cuban, owner of the Dallas Mavericks and Star of ABC’s hit show, Shark Tank, tweeted; “So are @robinhoodapp and @IBKR ending trading in #wallstreetbets stocks because they are losing their a** on these trades? Or maybe they don’t have the cash to enable the trades at this scale? Anyone have insight on their economics?”

Dave Portnoy, founder of Barstool Sports tweeted, “The Irony of @RobinhoodApp being named Robinhood when very clearly their entire agenda is to steal from the poor and give more to the rich is not lost on me.”

Will Robinhood be the hero and help the common investors profit, or will it do the opposite and help the crooked suits of Wall Street and their hedge funds? In my opinion Robinhood will continue to restrict the trading of GameStop and the other companies mentioned, putting Wall Street investors further ahead.