The Robinhood stock app restriction on GameStop and others, explained

Another chapter in this wild saga.

Welcome to FTW Explains, a guide to catching up on and better understanding stuff going on in the world. Today, we’re catching you up on the latest chapter in the stock market saga that has GameStop and other companies suddenly seeing their prices go up, and it involves an app.

This week, we’ve explained what the heck is going on with this madness on the stock market, in which investors on Reddit have flocked to various stocks that are being “short sold” and pumping up the value. It’s had a ripple effect that’s included New York Mets owner Steve Cohen infusing money into a firm hit hard by this. It’s pretty wild.

But something happened on Thursday morning that has social media abuzz and it involves something call Robinhood.

Dude, that’s a typo. It’s Robin Hood.

Oh, you must be confused. Robin Hood is the English legend of the guy who took from the rich and gave it to the poor.

Robinhood is a stock trading app that touts “commission-free investing.”

And what’s going on with them?

Seems like a lot of people have been using it to trade stocks like GameStop, AMC Theaters, Nokia and other apps that have been discussed by Redditors.

So what happened Thursday morning?

In a blog post, the app announced it was restricting transactions for many of the stocks being targeted — AMC, BlackBerry, Bed Bath and Beyond, Express Inc, GameStop, Koss Corporation, Naked Brand and Nokia.

What?! Does that mean people are stuck with that stock?

No. Users are allowed to sell them only, but they can’t do anything else with them.

What did they say about it?

Here are excerpts:

Our mission at Robinhood is to democratize finance for all. We’re proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term.

We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities. …

We’re committed to helping our customers navigate this uncertainty. We fundamentally believe that everyone should have access to financial markets. We’re humbled to have helped many people invest in the markets for the first time. And we’re determined to provide new and experienced investors with the tools and resources to help them invest responsibly for their long-term financial futures.

I can’t imagine people were happy about this.

You would be correct:

Those are the ones we could print.

So what are these investors going to do now?

They’re trying to find other apps to do their buying and there’s A LOT of social media chatter on how those who own these stocks should NOT sell them.

It sounds pretty chaotic right now.

Yup.

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