Robinhood protects the rich, not us

Josiah Favela, Staff Writer

Many people are outraged about Robinhood and Wall Street right now. Why is that the case? Many new investors are upset about how Robinhood is operating during the past couple of weeks. For not letting people buy any shares of stocks such as Gamestop, Blackberry, AMC, and others. Some may ask, “is Gamestop a failing business?” Well, yes. Since the COVID pandemic is still ravaging our country and fewer people are going to their stores. Plus, the store had a terrible trade-in policy before the pandemic. Gamestop announced it had closed 462 stores in 2020, and could rise to 1,000 in 2021.

A group of Redditors known as “wallstreetbets” noticed Investors on Wall Street were buying up Hedge Funds and basically betting the stock would go down. This tactic is known as short selling. When Wallstreetbets found out investors were going to short sell Gamestop, they decided to purchase a lot of stock. The price drastically and quickly rose — resulting in even more purchases.

This is known as a short squeeze in the stock market. On Jan. 4, 2021 the price of one share was $17.25, and on Jan. 28 it was a staggering $469.42, which resulted in a profit of $452.17 for one share. Investors on Wall Street lost a net worth of $19 billion, according to Business Insider. 

Out of nowhere, the trading app Robinhood put restrictions on buying stocks on its mobile app. However, the only option was to sell your stock, which gave people some leeway to get out. The stock’s price plummeted to between $200 and $300 per share.

This one move alone made many people outraged with Robinhood. Both sides of the political spectrum were furious such as  Rep. Alexandria Ocasio-Cortez (D-N.Y.) to Sen. Ted Cruz (R-Tex.). Alexander Ocasio-Cortez Tweeted “This is unacceptable. We now need to know more about @RobinhoodApp’s decision to block retail investors from purchasing stock while hedge funds are freely able to trade the stock as they fit. As a member of the Financial Services Cmte, I’d support a hearing if necessary.” Cruz responded with, “Fully Agree” As Robinhood is under fire from Congress it has to deal with some legal challenges. However, most of the cases will be dead on arrival because of Robinhood’s terms of service agreements for the use of the app. 

What do we even do after this? We should get in contact with our representatives, and tell them to do something about it because we don’t like to be taken advantage of by billionaires. Schools should start having financial literacy classes for every student. This is a bipartisan issue and we should do something about it.