Robinhood ads touting for 'the people' markets come back to haunt after GameStop scandal
Angry Twitter users target a December ad declaring, “We are all investors.”
Disgruntled Robinhood users this week slammed past marketing campaigns touting mass public access to the stock market after the embattled retail brokerage firm restricted trades involving GameStop and other surging stocks in response to unprecedented volatility.
A resurfaced March 23, 2016 post in which Robinhood said to “let the people trade” generated outrage among Twitter users who noted the platform’s actions this week ran contrary to its mission. A top reply on the post called on the public to “Delete Robinhood now.”
“Why would you ever trust a broker who would disable a stock to save a hedge fund,” the user posted.
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The controversy arose this week after swarms of Reddit users from the “WallStreetBets” forum and other retail investors started buying shares of GameStop, a struggling brick and mortar retailer that was among the most-shorted stocks on Wall Street. The trend squeezed hedge funds that bet against the stock, triggered wild fluctuations in the price of GameStop and volatility in the broader market.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GME | GAMESTOP CORP. | 29.32 | -1.57 | -5.07% |
| BBBY | NO DATA AVAILABLE | - | - | - |
| AMC | AMC ENTERTAINMENT | 4.97 | -0.02 | -0.40% |
In response to the volatility, Robinhood and other mobile brokerage apps opted to restrict transactions on certain stocks to limit their risk. Aside from GameStop, Robinhood imposed restrictions on AMC Entertainment, Bed Bath & Beyond, Blackberry, Nokia, Express Inc., Koss Corp., American Airlines, Tootsie Roll, Trivago and Naked Brand Group, blocking users from buying more shares.
The move prompted a backlash among lawmakers and retail investors alike, who accused Robinhood and other firms of blocking trades to protect hedge funds at risk of collapse due to their short positions. Robinhood was singled out for particular criticism because it touts ease of access for casual day traders, who can invest in any amount and make commission-free trades, as a core element of its business.
TRADING APP ROBINHOOD BLOCKS USERS FROM BUYING GAMESTOP, OTHER HIGH-FLYING STOCKS
Twitter users also targeted a Robinhood ad released in December in which the firm declared that “we are all investors.”
“Remember when greed was good? When you had to look the part? When you had to pay for a seat at the table?” the commercial voiceover says. “We set out to change it – the way the system works – to put the power in everyone’s hands.”
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Robinhood allowed limited buys of stocks affected by its restrictions on Friday. In a blog post, the firm disputed claims that its decision to limit transactions was made at the behest of embattled hedge funds.
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“To be clear, this was a risk-management decision, and was not made on the direction of the market makers we route to,” the company said. “We stand in support of our customers and the freedom of retail investors to shape their own financial future. Democratizing finance has been our guiding star since our earliest days.”