A day after shares of U.S. retailer GameStop rose 135% -- a wild upswing spurred by an online army of investors on a mission to challenge the dominance of Wall Street -- Robinhood, the stock-trading app at the center of it all, clamped down. Almost immediately, GameStop's shares plunged, falling 75% in 90 minutes. The limits on trading by Robinhood and other online brokerages, put in place as fears of market instability grew more widespread, set off a furious outcry among small investors. They claimed that the very apps that had democratized trading -- Robinhood in particular -- were now doing the bidding of Wall Street. Small groups of investors protested outside the New York Stock Exchange and at the Menlo Park, California, headquarters of Robinhood, a company that popularized the notion of commission-free trading.
They are among the millions of amateur traders collectively taking on some of Wall Street's most sophisticated investors -- and, for the moment at least, winning. Propelled by a mix of greed and boredom, gleefully determined to teach Wall Street a lesson, and turbocharged by an endless flow of get-rich-quick hype and ideas delivered via social media, these investors have piled into trades around several companies, pushing their stock prices to stratospheric levels. Some of the names are from an earlier business era. BlackBerry's shares are up nearly 280% this year. Stock in AMC, the movie theater chain, has surged nearly 840%.
Key players in the GameStop saga faced questions Thursday from House lawmakers concerned that even as investing becomes more democratized the scales are still tilted in favor of the big Wall Street institutions. GameStop shares soared 1,600% in January before retreating sharply. Some of the toughest questions and harshest criticism was directed at Vlad Tenev, CEO of Robinhood, which operates an online trading platform that is popular with individual investors. Tenev defended Robinhood against allegations that trading restrictions it put in place at the height of the GameStop frenzy disadvantaged those smaller investors in favor of bigger institutional clients. She also asked Tenev about Robinhood's close relationship with Citadel Securities, which she maintains poses a conflict of interest.
Fox Business Flash top headlines are here. Check out what's clicking on FoxBusiness.com. Rep. Alexandria Ocasio-Cortez and Sen. Ted Cruz on Thursday were among the many voices condemning the move by the retail trading platform Robinhood to restrict customers from trading shares of GameStop -- but the sophomore congresswoman said she had no interest in working with Cruz to hold Robinhood accountable because Cruz "almost had me murdered 3 weeks ago." Ocasio-Cortez, D-N.Y., was referencing Cruz's challenge to Arizona's Electoral College votes earlier this month as Congress met to certify President Biden's election win. Cruz's challenge has been linked by many to the attack on the Capitol by a pro-Trump mob that was fueled by the former president's false claims that he'd won the presidential election.
Radio host Rush Limbaugh called the on-going GameStop story "the most fascinating thing" to happen in a long time because it mirrors politics with elites trying to prevent ordinary people from benefiting – just like the political establishment has tried to hold down average Americans. Robinhood, TD Ameritrade and others restricted trading on Thursday and Wednesday, respectively, following an unexpected surge in trading volume of shares of GameStop, AMC Entertainment, Bed Bath & Beyond, BlackBerry and others. Limbaugh feels the move was made to protect hedge fund billionaires. The elites are bent out of shape that a bunch of average, ordinary users have figured out how to make themselves billionaires," Limbaugh said on Thursday. "I've been studying it all morning and the best thing I can tell you is… whatever you think is going on in politics, Washington establishment, the Deep State, what have you, it's the same thing in finance." Limbaugh said there are "those who are allowed to make a lot of money" and those who can't. Rush Limbaugh called the on-going GameStop story "the most fascinating thing" to happen in a long time because it mirrors politics with elites trying to prevent ordinary people from benefiting. "If you figure out how to make a lot of money, and if you're like Donald Trump and you figure out how to get elected, you figure out how to beat the Deep State, they're gonna come and they're gonna wipe you out," he said. "They're gonna destroy you, and that's what's happening with GameStop." Limbaugh then explained that a bunch of people on Reddit figured out how to "game the system" and turn the stock market in to a "profit-making device for themselves" but it came with consequences. "In the process they are harming the intended winners in this financial circumstance and that would be the hedge funds out there.