A Look Behind the Outrage of Robinhood Blocking Stocks
A Look Behind the Outrage of Robinhood Blocking Stocks
This past year saw riots all over the country in the face of rising political tensions. Now, in the first few months of 2021, we’re seeing an online revolt on the heels of Robinhood and other brokers restricting or outright blocking you from trading certain stocks.
For some background, GameStop Corp. (NYSE: GME), as well as other highly shorted stocks including American Entertainment Holdings Inc. (NYSE: AMC) and Nokia Oyj (NYSE: NOK), among others, have been targets of a short squeeze.
GameStop was the first of a group of stocks targeted by retail investors from a subreddit called “WallStreetBets,” self-described “degenerates” who banded together to “stick it” to Wall Street.
The group noticed that GME was one of the most heavily shorted stocks by hedge funds, and collectively they began purchasing shares. This resulted in a parabolic move in share prices, with GME increasing some 1,600% in a matter of days.
Those kinds of moves don’t just happen. The last time we saw we saw a squeeze like this was in 2018 with Tilray Inc. (Nasdaq: TLRY), a cannabis company that saw its stock shoot up 1,400%.
Now, about a week following the start of the GameStop short squeeze, the news of Robinhood and other brokers restricting and outright banning some trades has ignited a firestorm.
The Real Reason Behind Robinhood Banning Stocks
After the “WallStreetBets” crew forced multiple hedge funds into or close to bankruptcy, Robinhood stepped in to put a stop to it.
The California-based start-up company made a name for itself by trying to level the trading field. The pioneers of free trading changed the entire industry, and now it’s not letting users trade freely.
But why?
Because it started to affect Robinhood’s revenue.
The e-brokerage company operates without commissions, so its money has to come from somewhere. It comes from Wall Street firms buying your data, including the trades you make.
Robinhood’s biggest source of income? A firm called Citadel, which has lost almost $3 billion as a result of this squeeze…
Check out my short video on how short squeezes happen and get the real reason behind Robinhood blocking stocks.
P.S. Did you lose money or miss out on any big wins because of the restrictions? Are you considering changing brokers now? Share your thoughts on the ongoing short squeeze mania with us at wptestimonial@gmail.com, and we could feature your story in an upcoming piece.
5 Comments
Adam,
thanks for connecting the dots in less than 2 minutes- it helps to see the big picture short of all the underlying issues. What really pisses me off is this – it’s ok for the big brokerages to make a killing on shorting stocks and leaving the little guy out to dry but its not ok for the little guy to leave the big guy hanging with his guts out . I would like to mention we all got burned today as most trading platforms halted trades and blocked traders from getting onto their platforms to execute trades. That IN IT SELF sucks!
I personally don’t do shorts as I believe it fundamentally screws up values.
However in the world of the stock market the KING-MAKERS rule?. So what are the rules anyway?? Are they made up as you go along so if one group benefits and the other group does not, its ok!- you get wiped out and the big shooters clean up- tell me how does this work?
Its suppose to be a free market- I like what Dave Portnoy said earlier today Quote” I bought them with the understanding we live in free market where people can buy and sell stocks fair and square and at THEIR OWN RISK. I will hold them till the death as a reminder that RobinhoodAPP founders must go to prison.” un quote.
I support his tweet: This is total collusion, deception, and manipulation on a grand scale.
Money talks the most on the Robinhood decision to ban the trades on GME. They bowed down to the pressure of hedge funds without being fair to the retail investors. Why hedge funds were not banned on shorting GME? The playing field is not level after all. Level playing field is an illusion after all.
THANK YOU FOR TELLING THE TRUTH.
This is very upsetting to here. I hope everything gets situated and maybe we can get back and restore our morals and values and put God back in the school system. So we can live a prosperous life with respect and loyalty and love. And show our loved ones one nation under God best answer for us at the moment take care with respect
Lots of friends got into this and when 3 brokers pulled this lunacy of restrictions not just Robinhood my geek brain went into outrage overdrive and started compiling. 🙂 I dare say it’s unique. The privacy wave is already coming, and is something no big company and maybe even all governments can fathom because they are so comfortable with the overlord confidence that they can’t fathom it would make them either extinct or impotent. That’s why it will blind side them. Same for Google, Facebook, and the rest of voyers of your life. This is also a natural 100 year cycle and I am glad my brain is o e of those weird Tesla or Einstein like glial cell freaks. I need to get tested. If I get three nights of 8 hrs sleep I get really inventive.