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Robinhood reduces the number of restricted stocks amid GameStop frenzy

Amateur traders are now turning their attention to shares of silver

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Photo (c) jetcityimage - Getty Images
Trading app Robinhood, a favorite of amateur traders posting on Reddit, has reduced the number of stocks it is restricting from 50 to 10. They include many of the heavily traded names that shot up in value last week.

At the top of the list is GameStop, the stock that started it all. The struggling video game retailer is joined on the list by Koss, AMC Entertainment, Express, Inc., Naked Brand Group, Genius Brands International, Blackberry, and Nokia. All significantly increased in value last week.

Robinhood has also lifted restrictions on American Airlines, Starbucks, Tootsie Roll, General Motors, Beyond Meat, Bed Bath & Beyond, and Rolls Royce.

The brokerage company isn’t preventing the purchase of shares but rather is severely limiting the number of shares that can be purchased in an effort to avoid wild swings in stock prices. The heavy volume has also placed heavy cash demands on Robinhood since it has to front the money on stock purchases.

GameStop has the most severe limits. Robinhood traders can only purchase one share of the company’s stock and 10 options. AMC purchases are limited to 10 shares and 10 options contracts.

Other limits on stock purchases include 700 shares and 700 options contracts of BlackBerry, 20 shares and 20 options contracts of Express Inc., 600 shares and 600 options contracts of Genius Brands International, 2 shares of Koss Corp., 600 shares of Naked Brands Group, and 2,000 shares and 1,000 options contracts of Nokia Corp.

Robinhood’s explanation

When Robinhood placed limits on stock trading late last week, it sparked outrage among some Robinhood customers who said it ran counter to the company’s stated mission of democratizing trading. But in a blog post, the broker explained that the trading frenzy increased its financial demands.

“As a brokerage firm, we have many financial requirements, including SEC net capital obligations and clearinghouse deposits," the post said. "These requirements exist to protect investors and the markets and we take our responsibilities to comply with them seriously, including through the measures we have taken today."

Meanwhile, Wall Street is braced for more turbulence to start the week. GameStop and AMC were both volatile in early Monday trading, but the Reddit army has now turned its collective attention to silver, already pushing up the price of the precious metal.

The price of silver jumped 10 percent early Monday as retail investors bought shares of ETFs and mining stocks. Silver prices rose to their highest level in seven years in early trading. 

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