Stocks on the Robinhood restricted trading list like AMC and Koss are surging

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  • Stocks on Robinhood’s restricted trading list jumped on Friday, after the online brokerage said it would resume limited trading in the heavily shorted names.
  • GameStop surged more than 100% before being halted several minutes into trading due to volatility.
  • AMC Entertainment and Express rose 53% and 40%, respectively, before each stock was also halted.

Stocks on Robinhood’s restricted trading list jumped on Friday, after the online brokerage said it would resume limited trading in the heavily shorted names.

GameStop surged more than 100% before being halted several minutes into trading due to volatility. Koss advanced 63%. AMC Entertainment and Express rose 53% and 40%, respectively, before each stock was also halted. Naked Brand Group gained 41%.

For some of the stocks, Friday’s spike erased heavy losses sustained during the prior session after Robinhood and other retail brokerages announced restrictions on a handful of stocks, including in some cases not allowing customers to buy new shares and only sell. GameStop, for example, slid 44% on Thursday.

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Robinhood’s restricted list

In a statement late Thursday announcing that it would resume trading in the blacklisted stocks, Robinhood said: “We’ll continue to monitor the situation and may make adjustments as needed.” The start-up added that its earlier decision to restrict trading — which angered many users — was necessary in order to comply with capital requirements mandated by the SEC for broker dealers.

Brokerages like Robinhood often lay out money to investors to make trades. If a large number of the investors are hit with big loses and can’t cover the borrowed funds, the brokerages could face huge losses.

Interactive Brokers took similar steps as Robinhood, with both also raising margin requirements on certain securities. It is not unusual to raise margin requirements, but the move to restrict trading was more extreme, which angered and confused some users.

The decision followed retail investors flocking en masse to some of the market’s most heavily shorted names, forcing hedge funds and those on the other side to rush to cover their losses. This, in turn, drives share prices even higher. Investors turned to popular forums like Reddit’s WallStreetBets board to discuss their trades.

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