Twitter users on Thursday reported seeing their GameStop shares sold and their positions closed, with Robinhood justifying the sale due to “unreasonable risk.”
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.”
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.
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.
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.