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Robinhood, Interactive Traders Fight to Hold Back Grassroots Uprising Against Wall Street

As Wall Street fat cats feasted on the bloated carcasses of brick-and-mortar companies like AMC & Gamestop, some nerdy Redditors and smart-ass meme creators decided that they could cleverly fight back and make a boat load of cash for themselves and even some on behalf of the little guys.

Billion-dollar hedge funds were majorly shorting companies that were already on the ropes due to digital commerce giants like Amazon, but they were also getting pummeled by heavy handed lockdowns imposed by predominately blue state governors.

Then came the uprising. Due to crowd-mobilization on social media sites like Reddit, investors were able to use ‘free-stock trading’ platforms like Robinhood and Interactive Brokers to target these shorts and push their stock prices ‘to the moon.’ In the aftermath, when hedge funds that had taken out shorts couldn’t meet their targets, they would either have to cover the stock price or buy the stock themselves.

The explanation for this market activity, which is legal and not “speculation,” was explained well by a socialist website.

“The exemplar of this phenomenon has been GameStop, a US firm selling video games, consumer electronics and gaming merchandise with more than 5,000 stores internationally. At the start of the year its shares were trading at around $19. Yesterday they had risen to more than $330, an increase of 1,500 percent, taking the market value of the company to more than $20 billion.

The cause of the rise is a speculative frenzy among so-called retail traders on a Reddit messenger platform to buy a call options which pay out when the share price rises. A call option is not the purchase of the share itself but the right to buy it, at a fraction of the cost of the share itself, once a “strike price” is reached. This enables the making of profit when the call option is exercised as the share price continues to rise.

Disaster for the hedge funds. But it only took a day after the swearing in of former Fed Chair Janet Yellen for Wall Street to fight back. You can be sure a few phone calls were made, because Robinhood and Interactive Brokers are shutting down the ability of users to buy stocks that have been ‘quarantined.’

“We continuously monitor the markets and make changes where necessary,” Robinhood said in a statement trying to defend its anti-market actions. “In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AMC, $BB, $BBBY, $EXPR, $GME, $KOSS, $NAKD and $NOK. We also raised margin requirements for certain securities.”

This has sparked fury among those who were not only buying the stocks for their own personal gain, but to donate the gains to those ‘little guys’ who were getting slaughtered in the hostile business environment.

It has even united the polar ends of the political spectrum in condemning Wall Street’s anti-competitive protection of elitist billionaires at the expense of retail investors.

Rep. Alexandria Ocasio-Cortez weighed in:

Donald Trump Jr. also expressed his disdain for the moves:

Brandon Morse highlighted that this was ‘blatant market manipulation’:

If you doubted how revolutionary this moment has been for fighting back against Wall Street predators, look no further than the actions of billionaire investor Chamath Palihapitiya, who is eyeing a run for California governor to replace Gavin Newsom.

“Billionaire investor Chamath Palihapitiya will donate the money he made short-selling GameStop stock to Barstool’s small business fund,” he told CNBC. That would be a total of “$500,000, his initial GameStop investment and all the profits, to the Barstool Fund,” which helps struggling small business owners.

Elon Musk also got into the action early, as reported by CNBC:

Palihapitiya joined in with Reddit investors driving up the price of the game store’s stock, which rose 157% Wednesday following Elon Musk’s Tuesday tweet of “Gamestonk!!”. Palihapitiya announced that he bought 50 call options in GameStop. GameStop’s stock has risen a massive 750% in 2021 as online retail investing group WallStreetBets drove the stock up.

This is a watershed moment in the history of the U.S. stock market, even more so than the idle complaining of Occupy Wall Street. Sometimes to beat the system, you have to get inside the system.

And while many believe that Robinhood and Interactive Brokers can easily shut down investors from making an impact on Wall Street’s cynical maneuvering, there are plenty of observers who are saying ‘think again.’

Dave Portnoy of Barstool Sports didn’t mince words about Robinhood app:

The day traders have not yet begun to fight.

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OPINION: This article contains commentary which reflects the author's opinion.