Yesterday was crazy for personal investors who used the Robinhood app. Many suddenly couldn’t buy specific stocks, and others saw their ownership of stock sold without their approval.
And while a class action lawsuit was filed over the illegal behavior, Google was busy removing the one-star ratings from the app.
[Yesterday] Robinhood, the most popular trading app in the US, blocked its users from buying several trending stocks, such as GameStop and AMC, which have enjoyed a massive surge over the last few days, with much of the buying being driven by online communities.
The block on buying appeared to have an instant impact on the market, with the price of these stocks quickly declining to the detriment of many of these retail traders who responded by filing class action lawsuits that accused Robinhood of depriving retail investors of potential gains and leaving hundreds of thousands of one-star app reviews.
Robinhood had a 3.5 star Google Play rating before it banned trades on GameStop and other trending stocks
Robinhood’s overall Google Play rating dropped to 1 star after it banned trades on GameStop and other trending stocks
But now, Google has stepped in and purged over 150,000 negative reviews. After Google scrubbed these dissenting reviews, Robinhood’s unfavorable 1 star rating was transformed into a positive 4 star rating.
Robinhood’s overall Google Play rating increased to 3.5 stars after Google purged over 100,000 reviews
Most of the negative reviews criticized Robinhood for blocking these stock sales and accused the company of market manipulation but now these critical voices are being erased by the tech giant Google.
Google’s purging of these reviews follows community chat app Discord temporarily silencing WallStreetBets, an online investing community that had over 250,000 members on its Discord server.
Discord initially invoked the vague, subjective censorship buzzword “hate speech” as justification for shutting down the server yesterday but then worked with the WallStreetBets to set up a new server today.
After forbidding its users from buying several volatile stocks, including shares in GameStop, trading app Robinhood was allegedly caught selling its users’ stocks against their will, and in doing so hammering down their value.
Twitter users on Thursday reported seeing their GameStop shares sold and their positions closed, with Robinhood justifying the sale due to “unreasonable risk.”
— Joe McCann (@joemccann) January 28, 2021
Traders who attempted to cancel the sale were met with a message telling them the sale couldn’t be undone, “as we placed it to mitigate the risk to your account.”
At this point even if what @RobinhoodApp is doing with force-sells of $GME is *technically* legal due to the terms of their user agreement, they’ve torched any trust with their user base. Who would put money into a trading platform they don’t trust?
— Max Burns (@themaxburns) January 28, 2021
Earlier in the day, Robinhood banned the buying of $GME, $AMC, $BB and $NOK (GameStop, AMC Theaters, Blackberry and Nokia) stocks, after small-time traders snapped them up, inflated their value, and got rich while inflicting devastating losses on Wall Street hedge funds, who had gambled a fortune on these companies’ decline.
Robinhood’s users were outraged and accused the company of “market manipulation,” but even after a class action lawsuit was filed against Robinhood, the app’s team seemingly went a step further and began selling its users’ shares without their consent.
Nothing like closing out retail investor’s positions to defend the hedgies. All in a day’s work for Woke Capital! pic.twitter.com/8nw5JtQS65
— WokeHammer 40k (@WokeCapital) January 28, 2021
The alleged forced sales came after many of the amateur traders who drove GameStop’s share value from around $18 in December to more than $450 on Thursday morning refused to sell of their own accord.
Had they sold when Robinhood banned buying, the market would have become flooded with shares that would have decreased in value, given fewer customers would have been able to buy them.
So, Robinhood is a scam. They’re protecting the hedge funds, allowing them to close out their shorts at a lower price by preventing Robinhood customers from buying more of the stock which is causing the prices to drop. https://t.co/TjyFGsjKI9
— Mark Dice (@MarkDice) January 28, 2021
The forced sales apparently had the same effect. GameStop’s stock price rallied from around $240 before users started receiving the notifications to $430 as the apparent sell-off began, before plummeting back to around $220 afterwards. At time of writing, Robinhood had not officially acknowledged the reported automatic sales.
A screenshot shows GameStop ($GME) stock price on the afternoon of Thursday, January 28, 2021
The lower the value of the stocks in question, the less money short-selling hedge funds lose when they buy back the shares they originally borrowed. Online, commentators have accused Robinhood of doing the bidding of Citadel Securities, a Chicago-based firm that handles a majority of the app’s trades and also bailed out Melvin Capital, a hedge fund brought to the brink of bankruptcy by the GameStop surge.
Across the board, the financial establishment has reacted with outrage to the surge in what previously were considered dead stocks. Industry insiders have taken to TV to decry the amateur investors, hedge fund billionaires have demanded the government intervene on their behalf, and investment firms have bailed out their short-selling colleagues who lost tens of billions of dollars when the stocks rose, instead of falling as they predicted.
Wall Street’s fury, however, has united multiple sides of the political compass in defiance. Democratic congresswomen Rashida Tlaib and Alexandria Ocasio-Cortez of the progressive ‘squad’ have called for Congressional hearings into Robinhood’s alleged “manipulation.”
Texas Republican Ted Cruz has also lent his support, while eccentric billionaire Elon Musk – an early advocate for the amateur traders – responded “absolutely” to Ocasio-Cortez’s calls for investigation.
— Elon Musk (@elonmusk) January 28, 2021
— Dave Portnoy (@stoolpresidente) January 28, 2021
White House Press Secretary Jen Psaki said on Wednesday that Treasury Secretary Janet Yellen was “monitoring the situation.”
However, Yellen has taken more than $800,000 in ‘speaking fees’ from Citadel. Asked on Thursday whether Yellen would recuse herself from advising President Joe Biden on the situation, Psaki did not answer yes or no, stating instead that Yellen is “one of the world-renowned experts on markets, on the economy,” and that “it shouldn’t be a surprise to anyone she was paid to give her perspective and advice before she came into office.”
Great question from Nandita Bose of Reuters to Psaki if Treasury Sec. Janet Yellen would recuse herself from discussions about #RobinHood seeing has how she’s given paid speeches to the hedge fund Citadel. Psaki dodges b/c Yellen is “one of the world renowned experts on markets” pic.twitter.com/3paPVMv846
— Curtis Houck (@CurtisHouck) January 28, 2021