Robinhood App Creates Loss of Billions For Stock Holders

Robinhood+App+Creates+Loss+of+Billions+For+Stock+Holders

Griffin Brumbelow, Writer

The stock trading app Robinhood is currently facing dozens of lawsuits after the company restricted several stocks including Gamestop, AMC, Bed Bath and Beyond, and Nokia. At least 30 parties in 10 states have sued the company in federal court. According to The Verge ‘’They allege that Robinhood users lost millions of dollars because they were unable to buy or sell stock during the freeze, and that the company chose to ‘’manipulate the market’’ to help other financial institutions.’’ The recent stock surge of Gamestop forced short-sellers who were betting against the stock to buy more shares to hedge their positions, which sent the stock soaring even higher. 

 

Beginning January 28th Robinhood infuriated users with several ‘’meme stocks’’ which helped facilitate an unprecedented boom in value for some financial institutions. Robinhood defended the move on online calling it a ‘’risk-management decision’’ that was necessary due to extraordinary circumstances. Robinhood has lifted the trading freeze on Gamestop and other stocks, but it has inducted strict trading restrictions for shareholders.

 

Robinhood has announced that stock holders will be allowed to close out existing trades but won’t be able to purchase shares of stocks in companies including Gamestop, AMC, and Blackberry. However the company’s CEO is expected to testify before Congress on February 18th. As of February 2 the share price for Gamestop crashed from $227 to $93.