Robinhood, the stock app that wanted to “democratize finance for all,” stepped away from that motto as they stopped all of its users from being able to buy stocks from GameStop ($GME), AMC ($AMC), Nokia ($NOK), Blackberry ($BB), and others. For that reason the service has since seen a backlash which not only angered thousands of retail traders, they’ve seen their Google Play app rating drop immediately to 1-star when displeased users are letting the company know that they are not happy at all.
The backstory here is long, Robinhood put a block on buying all of those stocks after they decided it will be “significant market volatility.” If you followed the story of GameStop’s stock price over the past week, that “volatility” they point was due to a flood of stock purchases that raised the value of GameStop so significantly, that bankrupted Melvin Capital, a hedge fund that held a huge “short” position in $GME.
As this week kicked off, the growing power over at /r/wallstreetbets that helped boost the GameStop situation moved to several other stocks to try and do the same, AMC being a good example. Those stocks are a part of the list of stocks that Robinhood put a halt to.
Robinhood explained in a statement their decision, but it has not been received well by the users. The press and people are calling this an outrageous market manipulation and threatening with class-action lawsuits. It doesn’t look good for Robinhood.
UPDATE 1:50PM: Robinhood issued an update this afternoon saying that tomorrow (1/29) they are planning to allow “limited buys” of the stocks they locked buyers out of purchasing. They are calling all of this a “risk-management decision” that “was not made on the direction of the market makers we route to.” That will be unconvincing to all Robinhood users.
UPDATE 1/29: After one day Google removed a majority of the 1-star ratings that everyone left to the Robinhood app, now is back up to 4.3 stars. We can see 176K reviews showing when yesterday was 200K. So Google cleaned up the 1-star reviews to save the app’s rating. Strange move by Google.