Source: Joe Maring / Android Central
What you need to know
- Robinhood blocked trading to a number of stocks after trading surged thanks to a group of Redditors.
- GameStop, Nokia, AMC, and other companies were affected by the surge.
- Robinhood's rating on the Google Play Store tumbled after a swarm of negative reviews plagued the app.
Anyone following the drama surrounding Robinhood knows just how much of a mess it's become. For those not aware, the mobile investment app has been under fire after it halted trading to a number of companies after they saw their shares surge. Many people weren't happy with the decision, calling it market manipulation, and even prompting a lawsuit against Robinhood. Another result of the drama is the app saw its rating drop on Google Play Store following a swarm of negative reviews.
According to 9to5Google, the Robinhood app was sitting pretty at four stars, which then tumbled all the way down to one star. Apparently, Google caught wind of what was happening and ended up removing over 100,000 negative reviews, which brought the app back to its pre-WallStreetBets rating.
The Reddit group /r/WallStreetBets is largely responsible for the surge in trading for several companies, which included Nokia, AMC, Blackberry, and more. For instance, GameStop, which has been struggling to survive the impact of the pandemic, went from $19 at the beginning of the year to just less than $100 on January 26th, and since then rose to a whopping $467 at the height of the trading spree today. The move was to drive a loop that would see the stocks grow by squeezing out large investors who were short-selling these stocks, which forced them to buy and drove the stock higher.
The move to halt trading was seen as market manipulation and a way to protect Wall Street hedge funds. Amid the backlash, Robinhood issued a statement about their decision:
Amid this week's extraordinary circumstances in the market, we made a tough decision today to temporarily limit buying for certain securities. As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits. Some of these requirements fluctuate based on volatility in the markets and can be substantial in the current environment. These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today.
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