Robinhood and Interactive Brokers to resume limited buying of GameStop and other stocks

Online brokerages, including Robinhood, announced to have halted the purchase of several stocks on Thursday, including GameStop, that a group of retail investors targeted in recent weeks, resulting in unprecedented rallies.  

Lawyer Jake Chervinsky of Compound (Fintech Company) tweeted:

“Robin Hood: a parable about stealing from the rich to give to the poor. Robinhood: an app about protecting the rich from being short squeezed by the poor.”

Interactive Brokers and Robinhood Markets Inc., however, said later on Thursday that they are likely to remove the ban on Friday – an announcement that resumed the bull run as stocks rebounded sharply in extended trading.

Robinhood’s CEO Vlad Tenev’s comments on Friday

According to CEO Vlad Tenev of Robinhood:

“In order to protect the firm and protect our customers we had to limit buying in these stocks. We absolutely did not do this at the direction of any market-maker or any hedge fund or anyone we route to or other market participants.”

GameStop (NYSE: GME) opened at a per-share price of £192.78 on Thursday. After touching a high of £360 per share, the stock tumbled to close at £144.45 per share on the news of restrictions. But it rallied back to £228 per share as Interactive Brokers and Robinhood expressed plans of allowing limited buying. At the time of writing, GameStop is valued at £9.88 billion.

Celebrities, retail investors, and even policymakers condemned online brokerages for imposing restrictions on Thursday, accusing them of protecting the Wall Street’s interests but sacrificing those of the small investors.

U.S. Senator Sherrod Brown’s statement on Friday

U.S. Senator Sherrod Brown said in a statement:

“People on Wall Street only care about the rules when they’re the ones getting hurt.”

Robinhood also said on Thursday that its approached lenders including Goldman Sachs and JP Morgan Chase to tap several hundred million dollars. The financial services company refrained from commenting any further on Thursday, but CEO Tenev clarified in an earlier blog post that a liquidity crisis wasn’t yet in the offing.

AMC Entertainment (NYSE: AMC) also jumped close to 30% in after-hours trading on Thursday to trade at £8.25 per share. On a year-to-date basis, the stock is now up more than 300%. It is currently exchanging hands at £6.31 per share after touching a high of £14.56 earlier this week. The largest movie theatre chain in the world now has a market capitalisation of £2.14 billion.

Read more: should you buy GameStop shares?