Robinhood, an online stocks and cryptocurrency platform, temporarily went down amid a recent surge in GameStop’s value as a result of a Reddit push.
The web app “experienced difficulties” for some users on Wednesday as traders continued to try and cash in on the skyrocketing stock for GameStop, but the equities and options trading through the iOS and Android apps remained fully operational, according to a Robinhood spokesperson. The temporary outage highlights the extent to which Reddit’s push has helped the stock, which surged by roughly 400% since the year began, thanks to a fight prompted by day traders on a Reddit investing thread.
Also affected by disruptions on Wednesday, Trading 212, the United Kingdom’s top trading and investing app, warned users that they could experience a “service disruption” as a result of “an unprecedented increase in demand” at the “start of the U.S. market session.”
Robinhood and Trading 212 were not the only companies to report problems on Wednesday, as a website called Downdetector showed that TD Ameritrade, Charles Schwab, and other retail brokerages face reports about disruptions.
After hovering below $5 per share for almost all of 2020, GameStop closed last Friday at roughly $65 per share, which then surged on Monday morning to more than $140 a share, prompting the New York Stock Exchange to issue a temporary pause on trading the stock four minutes into Monday’s session.
Tuesday’s after-hour trading sent the stock price as high as $243 after Tesla CEO Elon Musk tweeted, “Gamestonk!!” before it ultimately settled to $209.
Robinhood CEO Vlad Tenev told Andrew Ross Sorkin of CNBC’s Squawk Box on Wednesday morning that a majority of the platform’s users are long-term investors and not rapid buyers and sellers like those engaged in the GameStop frenzy.
“Most of our customers are, you know, what’s called buy and hold,” Tenev said. “Obviously, the passive ones don’t get as much attention out in the public.” Tenev added that the company does have “processes that respond to increases in volatility in certain names, by doing things like raising the margin requirements.”
“Like other brokerages do, we monitor volatility, and we take steps as appropriate, like raising the margin requirements,” Tenev said. “I do think it’s wrong to assume, though, that most of our activity is characterized by trading of volatile stocks.”
While the GameStop frenzy continues, and it remains unclear if they were the impetus behind the unresponsive time period, some Reddit users have begun discussing exit strategies and how the surge will end.
