The unprecedented rally of GameStop stock, propelled largely by retail investors, faced a new hurdle Thursday after trading platform Robinhood restricted users from purchasing shares of the electronics retailer.
In addition to GameStop stock, the platform also restricted certain transactions for other stock touted by the sub-Reddit page r/wallstreetbets including shares of AMC Theaters, BlackBerry and Bed Bath & Beyond.
“We continuously monitor the markets and make changes where necessary,” Robinhood said in a company blog post. “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. We also raised margin requirements for certain securities.”
When Robinhood users logged in Thursday, they were informed they could no longer buy shares of GameStop but could still sell them — which would essentially lower the price.
Robinhood’s blog post did not provide much more information as to the reason for this abrupt halt, but touted its finance “educational resources.”
“Amid significant market volatility, it’s important as ever that we help customers stay informed,” the company stated. “That’s why we’re committed to providing people with educational resources. We recently revamped and expanded Robinhood Learn to help people take advantage of the hundreds of financial resources we offer and educate themselves, including how to make sense of a volatile market. In 2020, more than 3.2 million people read our articles through Robinhood Learn.”
The massive rally for GameStop stock stems from r/wallstreetbets, where amateur traders convened to share investing ideas and more.
The forum has grown into a community of some 3 million, and coupled with the rise of trading apps such as Robinhood, these retail investors have shown immense power over financial markets this week as they pushed the price of GameStop to unprecedented highs.
GameStop, meanwhile, has largely struggled as a retailer in recent years and traditional investors were scratching their heads at its recent stock rally. As of Wednesday, the stock had climbed nearly 2,000% since the beginning of the year.
On Thursday morning, despite the Robinhood hold, the stock was trading at approximately $360 a share. Just a few weeks ago, GameStop was trading for less than $18 a share.