The popular trading app Robinhood has now restricted the purchase of 50 different stocks, including blue-chip stocks like Starbucks and General Motors. After the disastrous fallout from last week’s GameStop stock debacle.
According to the Daily Mail, the move is an apparent act of desperation after the company’s cash reserves were stretched to the limit last week after trading driven by small investors from a Reddit message board took on giant hedge funds that had bet against shares of the struggling video game retailer GameStop.
In their statement, Robinhood admitted that it had restricted users from purchasing certain shares this week because the company struggled to meet deposit requirements with the clearinghouses behind the scenes of the stock trades.
“We did this because the required amount we had to deposit with the clearinghouse was so large – with individual volatile securities accounting for hundreds of millions of dollars in deposit requirements – that we had to take steps to limit buying in those volatile securities to ensure we could comfortably meet our requirements,” the company said in a statement posted on the blog.
Jeffrey Gundlach, a billionaire investor, claims stimulus checks are to blame for fueling the insurgence of small-investors.
“I think wherewithal from governmental stimulus ultimately is really the cause,” Gundlach, who is the founder of the $148 billion bond fund DoubleLine Capital, told Fox Business on Friday.
Robinhood’s list of restricted stocks includes vaccine makers Moderna and NovaVax, Beyond Meat, American Airlines, AMC, and Bed, Bath and Beyond– among others.
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