Robinhood online trading app has set trading limits for 50 shares, including GameStop (GME) – Get the report, against the background of the continuous volatility of the actions promoted in the chat rooms from the social networks, including the subreddit WallStreetBets.
The move extends to a list of 13 limited Robinhood shares on Thursday. This move, along with the limitations imposed by online brokerages, has sparked outcry among social groups and elected officials, citing a Wall Street effort to protect itself against newly empowered populist investors.
Robinhood said it needs to limit stock trading because of the huge costs associated with settling the massive number of transactions.
The company received a $ 1 billion private equity infusion and drew a $ 500 million line of credit to cover its needs, Bloomberg reported.
GameStop shares rose in January as small investors targeted sharply shortened shares to create a short cut. The concerted action helped force actions of up to $ 482 this week.
The Reddit effect has extended to other sharply shortened stocks, including Bed Bath & Beyond (BBBY) – Get the report, American Airlines (AAL) – Get the report, To Kohl (KSS) – Get the report and others. Alternative investments, including silver and Dodgecoin cryptocurrency, also rose.
Robinhood said account holders can only open new 1-share positions in the 50 shares it has set limits. It also limited the number of option contracts that can be purchased.
GameStop shares rallied 70% on Friday, on an otherwise low day for markets that saw the Dow industry lose 620 points. In stock after hours, the stock decreased by $ 8 or 2.5% to $ 317.00