Bloomberg announced that the famous Robinhood service banned users from opening long positions in the shares of video game store GameStop Corp. (GME), telecommunications firm Nokia Corporation (NOK), and the largest movie theatre chain in the world, AMC Entertainment Holdings, Inc. (AMC). Only shares in these businesses will be sold by customers of the service.
GameStop shares fell by 44.29 percent at the end of trade on January 28, to $193.6, Nokia stock by 28.4 percent to $4.69, and AMC Entertainment stock by 56.63 percent to close the trade at $8.63.
Robinhood also limited shares trades of BlackBerry telecommunications firm, Bed Bath & Beyond home improvement chain, Express and Naked Brand Group dealers, and KOSS Corporation headphone, headset, and microphone manufacturer. The customers of Robinhood will no longer be eligible to purchase these stocks.
Due to massive demand from private investors, shares of GameStop, Nokia, and AMC Entertainment Holdings grew sharply this week. The shares in the GameStop video game store chain have seen the most visible development. Their growth has outshone 700 percent over the past week.
Big hedge funds were betting on a decline, while private investors, on the other hand, were aggressively investing. This caused the funds playing against GameStop to cut short positions, allowing the price of shares to climb higher.
Robinhood is an online broker that allows users to use a smartphone application without a fee to sell on the stock exchange. In the United States, the service is very successful, with the number of clients increasing to 13 million in 2020.
The business was founded in 2012 by two graduates from Stanford, Vlad Tenev and Baihu Bhatt. It offers brokerage services and enables traders to exchange securities, bonds, ETFs, futures, and cryptocurrencies. It is quick to use the app, and this brings many novice private investors to the service. The start-up’s success is also attributed to the lack of trading commissions. The average age of its clients is 31 years, according to the company itself.