THE Robinhood app has limited customers to purchasing just one share of GameStop stock as the Reddit-fueled stock market chaos continues.
The app halted trading of GameStop and other companies earlier this week after buyers, who organized on Reddit, sent stock prices skyrocketing by purchasing shares of struggling companies.
Robinhood limited users to buying one share of GameStop[/caption]
Reddit users sent GameStop stock prices skyrocketing in January[/caption]
The move derailed short-selling tactics, which is when major hedge funds purchase stocks from companies that are performing poorly.
Reddit users came together to send GameStop prices soaring, as well as those of AMC Entertainment, Blackberry and several other struggling companies.
The “Reddit rally” sent the stock market into such chaos that Robinhood shut down trading of the companies on Thursday, which briefly sent stock prices spiraling downward.
The company began allowing trading again on Friday, but only in restricted amounts.
GameStop stock prices were around $17 a share at the beginning of January[/caption]
The ‘Reddit rally’ also targeted AMC Entertainment[/caption]
As of Friday afternoon, users can purchase only one share of GameStop stock.
If a customer already has one or more shares of the stock, they cannot purchase any more.
The stock trading app also expanded its list of restricted stocks from 13 on Friday morning to 50 later in the day.
The most shares users could purchase from any of the companies on the expanded restricted list is five.
Clients can also only purchase one share of AMC Entertainment, American Airlines, Bed Bath & Beyond and Koss.
Robinhood CEO Vlad Tenev denied that the company was bowing to Wall Street giants[/caption]
Robinhood has been slammed by users, and politicians from both sides of the aisle, for shutting down trading when everyday users began taking advantage of market rules.
The chaos began when Reddit users, using the forum /r/WallStreetBets, organized to pull one over on major hedge funds by buying huge amounts of GameStop stock.
The users sent the stock prices skyrocketing, from $17.25 per share at the beginning of January to $347.51 per share by January 27.
After Robinhood restricted selling, it was hit by several lawsuits alleging the company put investors who use the app at a disadvantage by knowingly and willingly restricting certain transactions.
In an interview last night, Robinhood CEO Vlad Tenev denied that the app is restricting trading to appease Wall Street giants, a rumor floating around the internet.
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He told Yahoo Finance: “On that conspiracy theory, I think I’ve over and over again said it’s not true.
“Our decision to temporarily restrict customers from buying certain securities had nothing to do with a market maker or a market participant or anyone like that putting pressure on us or asking us to do that.
“It was entirely about market dynamics and clearing house deposit requirements as per regulations.”