The online trading app Robinhood has imposed 50 trading restrictions, including GameStop, (GME) – Get report, amid continued volatility in shares offered in social media chat rooms, including the WallStreetBets subreddit.
The move expands on a list of 13 stocks that restricted Robinhood Thursday. This move, coupled with limits set by online brokers, has sparked outcry among social media groups and elected officials claiming they are an attempt by Wall Street to protect themselves from populist investors.
Robinhood said it had to restrict trading in the shares due to large costs associated with completing the large number of transactions.
The company received a $ 1 billion private equity infusion and set up a $ 500 million line of credit to meet its needs, Bloomberg reports.
Shares of GameStop soared in January when small investors targeted the heavily shorted stock to create a short push. The joint action this week helped force shares to $ 482.
The Reddit effect also extended to other heavily shortened stocks, including Bed Bath & Beyond (BBBY) – Get report, American airline (AAL) – Get report, Kohl’s (KSS) – Get report and others. Alternative investments, including silver and the Dodgecoin cryptocurrency, also saw gains.
Robinhood said account holders can only open new 1-share positions in the 50 shares they restrict. It also limits the number of option contracts that can be purchased.
Shares in GameStop rose 70% on Friday, on an otherwise lower day for markets that the Dow Industrials lost 620 points. In after-hours action, the stock rose lower and dropped $ 8 or 2.5% to $ 317.00