GameStop soars as Robinhood lifts restrictions
Shares of GameStop resumed their torrid rally - at one point more than doubling in price on Friday - after online broker Robinhood partially lifted a controversial trading restriction.
Robinhood's reversal Friday once again unleashed an army of small investors behind this week's dramatic squeeze on Wall Street hedge funds, seen as a showdown between so-called amateur investors and the Wall Street professionals.
The trading app said on its website that it was easing the restrictions, but still would not allow investors to purchase fractional shares in GameStop and the other stocks caught up in the recent trading frenzy, which means smaller investors will have to put up more money if they want to buy any of those stocks.
Thursday's clampdown, which Robinhood said it made to protect the company and its customers from volatility, angered its users – some of whom staged a small protest outside company headquarters in California but hordes more turned to WallStreetBets to express their outrage.
That's the anonymous nearly 6-million member Reddit forum largely seen as sparking the rally in GameStop and the other stocks.
31-year-old Collin McLelland is one of those who jumped on the GameStop bandwagon and cried foul at Robinhood's restrictions.
"You know when the big man, when the quote unquote suits, don't get their way and they start losing, they just shut down the game and change the rules. I think it's extremely unfair. The SEC is put in place to protect the little man from things like this happening. So hopefully, regulators and politicians are taking a strong look at this and they'll get down to the bottom of it."
Officials are paying attention.
The Securities and Exchange Commission issued a warning Friday to both brokerages and the pack of social media traders that it was closely monitoring potential wrongdoing.
The trading surge is taking its toll on the Robinhood platform, which was already one of the more popular apps for small investors. It reportedly had to raise more than $1 billion from existing investors and tap a credit line so that it has the funds to ensure trades can go through without a hiccup. Trades that are coming in swiftly Friday as GameStop soared once again.
