In January of 2021, an army of users from the sub-Reddit r/wallstreetbets declared war on Wall Street. The users urged each other to buy stock en masse from GameStop. The sudden buying of GameStop caused the retailer’s stock price to skyrocket, reaching a market value of $500 per share.
Originally, GameStop’s stock price was predicted to drop as the pandemic decreased retail sales. Hedge funds responded by betting against their stock, which is known as short selling. But once GameStop’s stock price rose, it caused several large hedge funds, such as Melvin Capital, to lose significant amounts of money.
Robinhood, a stock trading app, was the principal way these retail investors got involved. However, the app began setting restrictions that prevented users from buying GameStop stock and other securities. But as Wall Street came crashing down, users complained about Robinhood’s unethical practices set to only benefit the upper class. One would think that an app like Robinhood would aim to focus on increasing user engagement.
One of the complaints users had was the lack of feedback from customer service at Robinhood. “You send your complaint into the void with little hope that anyone will get back to you. I just want the money I made, so I can close my account and be done with this service,” stated one frustrated user.
Others claimed that the app prevented them from being able to liquidate holdings or trade their stocks. Between Jan. 24 and Feb. 2, over 100 complaints were submitted about the app to the Federal Trade Commission (FTC). This government agency ensures consumer rights are protected by monitoring and taking action against unlawful business practices.
It is easy to see that Robinhood is picking sides. The restrictions that the app put upon users as stock grew volatile only caused more backlash. They defended their actions by stating that it was “a risk-management decision.”
The trading activity caused a massive amount of strain on Robinhood. This forced them to raise funds in order to pay clients and prevent large financial losses for major trading partners of the application.
Without the emergency funding, the app was potentially heading towards bankruptcy. However, the company still failed to inform its users beforehand of the restrictions. Many still claimed foul play.
It seems that specific organizations will always favor the 1% over the common man when it comes to increasing economic growth and keeping the market stable. The war declared on Wall Street and its aftermath is proof that capitalism is tied to all American institutions and controls how society works. Robinhood’s restrictions are a prime example of market manipulation.
With a name like “Robinhood,” one would think the app would be interested in giving to the poor instead of helping the rich. Their YouTube advertisements target the common people and tout the app’s ability to make trading stocks easy. Their slogan is “we are all investors.” But their advertisements fail to include warnings about the restrictions users may face. How ironic when connecting the app to the original folktale from where it gets its name.
