The online brokerage firm received backlashes from the public when it halted GameStop trading a while ago. The firm revealed that it stopped the trading to prevent itself from being parties to the Reddit group’s plans to inflate share prices. Although Robinhood denied some claims, sources alleged that the company took the decision to prevent Citadel from facing major losses.
Some Hedge funds placed a bet on the shares dropping, and Citadel was part of those companies. People claimed that Robinhood’s partnership with the Hedge Fund made it restrict GameStop trading, which eventually led to the fall of share prices. Earlier this week, some sources revealed that the firm’s action instigated the US Congress’s presence to investigate the issues involved adequately.
GameStop shares rise with lifted restrictions
When Robinhood removed the previous restrictions on GameStop shares, the public immediately surged the share prices. The incidences surrounding the trade halting gave the videogame company some publicity to attract more investors, who rapidly bought shares. The investment saw a 70% surge when traders who had earlier planned to buy shares before the restriction finally got the opportunity.
At the beginning of the year, the firm had each share retailing for $20 but currently stands above $70 since the Reddit group’s joint plan increased the prices. Some statistics show that the prices almost hit $500 per share last week.
The group planned to get institutional investors like Wall Street companies to buy back shares at higher prices, which eventually recorded the losses closing in billions of dollars. GameStop stocks were not the only ones that recorded new gains.
AMC entertainment also saw a surge when the app lifts all earlier trading restrictions. The group’s name, which is called WallStreetBets, continues to wield greater power in the space since the army’s rally to increase some firms’ share prices.
Robinhood’s move against trading in some stocks
In late January, the firm’s action got many people’s attention, primarily because the move could have significantly affected some plans and thereby giving wall streets an unfair advantage. Robinhood wanted to reduce the trading by mandating more requirements while limiting some activities to position closing.
Traders shared their dissatisfaction because of the platform’s move, which could have cost them millions of dollars. Interested buyers could not buy the stock at that point. Even after Robinhood eased restrictions, the entire week went by until the Reddit traders jointly bought the shares, which skyrocketed prices.
The restriction easing was a gradual process, with the app changing from strictly position closing, to accommodating fractional shares. This means that investors could still perform fractional position sales within the restriction. Robinhood revealed that high deposit requirements caused the decision it took to restrict trading.
Many other limitations came in, with the firm preventing buyers from purchasing digital assets. The brokerage firm was not the only one that restricted readings during that period. Several other platforms placed restrictions, following talks on governmental intervention and bodies demanding relevant platforms to pause activities linked to those shares.
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