Robinhood has always received positive praise from investors starting out and trying to find their feet. They offer little to no commission on investments, provide adequate customer service to help with problems, and generally provide one of the best platforms to trade.
However, they came under fire a few hours ago, with people accusing the Online Broker of “stealing from them.” On their platform, trendy stocks have slid in value, making so many people lose valuable money. Some users have also accused Robinhood of selling their stocks without their consent.
Although these restrictions were common throughout other trading platforms, Robinhood has been the center of attraction due to how many people patronize them.
What Transpired?
Vladimir Tenev, the Robinhood CEO, stated on Thursday that they restricted trade in good stocks like Gamestop, AMC Entertainment, and American Airlines. He further said that Robinhood performed this action to save itself and its highly esteemed customers from volatility.
During this same period, GameStop’s stocks mysteriously increased by more than 40%, putting the stock at $500 per share. GameStop’s price has risen by more than 1500% this year, which spells terrible news for short-sellers betting that their stock would fall.
On CNBC, the Robinhood CEO stated that the Online Brokerage tapped credit lines. When interviewers asked him why the company did this, he said “so that we could maximise, within reason, the funds we have to deposit at the clearing houses to facilitate more trade.”
He stated that they understand their users are frustrated, and that they are to blame for the misunderstanding. He promised that they are doing all they can to remove the restrictions in these stocks, so everyone has the opportunity to buy them.
What People Had To Say
Robinhood has always been known to look out for the little guy. However, because of the company’s recent actions, many users have criticized them on social media platforms, and other messaging platforms. On Twitter, someone said, “Robinhood? Nah y’all ROBBING the HOOD.” Another said, “crazy how you guys would rather watch your company burn to the ground than live up to your promise to provide users with free trade.”
To add salt to their wounds, U.S politicians on both parties have expressed their anger at Robinhood’s actions. Alexandria Ocasio-Cortez, a Democrat, posted, “this is unacceptable! We need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they see fit.” Tesla’s founder, Elon Musk, commented on her post, totally agreeing with her opinion.
Two influential Robinhood users even sued Robinhood Financial, looking for damages for trading stoppages in a series of stocks. The news agency at Bloomberg also reported that the online brokerage borrowed hundreds of millions of dollars from companies like JP Morgan and Goldman Sachs. Tenev confirmed the company’s borrowing, but he didn’t discuss exactly how much they borrowed.
What We Think About Robinhood
Robinhood has been a rock to many small investors for the last few years, and the app has more than 13 million users. Although they have explained the reasons behind their actions, many people still disapprove of them and rebuke them.
Tenev also failed to discuss several concerns that the masses have. Combine that with the massive amount of money they borrowed, and we have one big conspiracy theory of them making the rich richer, and keeping the little man down.