Online trading app Robinhood has imposed trading limits on 50 stocks, including GameStop (GME) – Request report, amid ongoing volatility in stocks touted in social media chat rooms, including the WallStreetBets subreddit.
The move expands on a list of 13 Robinhood limited stocks Thursday. That move, along with the limits imposed by online brokers, sparked an outcry from social media groups and elected officials claiming Wall Street was trying to protect itself from newly empowered populist investors.
Robinhood has said it had to limit stock trading due to the massive costs involved in settling the sheer volume of trades.
The company has received a $ 1 billion private equity infusion and drawn a $ 500 million line of credit to meet its needs, Bloomberg reported.
GameStop’s shares skyrocketed in January as small investors turned to the heavily short-short stocks to create a short squeeze. The joint action helped push shares up to $ 482 this week.
The Reddit effect has also expanded to other high-short stocks, including Bed Bath & Beyond (BBBY) – Request report, American Airlines (AAL) – Request report, Kohl’s (KSS) – Request report and others. Alternative investments, including silver and the Dodgecoin cryptocurrency, have also seen an increase.
Robinhood said account holders can only open new positions of 1 share in the 50 stocks it has imposed limits on. It also limited the number of options contracts that can be purchased.
Shares of GameStop were up 70% on Friday, on a further declining day for markets where the Dow Industrials lost 620 points. In out-of-hours action, the stock fell lower, falling $ 8 or 2.5% to $ 317.00