In the wake of the GameStop debacle of two weeks ago, some angry Robinhood customers have taken their anger offline and shown up at the front door of the company's headquarters on the San Francisco Peninsula.
Menlo Park police say that they've responded to multiple incidents in the last two weeks at online brokerage firm Robinhood's headquarters, and received a total of ten reports. CNBC reports that groups of angry protesters, numbering as many as 15 at a time, have protested outside the building on different days, and in one instance, a man threw animal feces at the door of the office building.
The protests come after the company made national headlines for its role in helping small-time day-traders and investors to drive up the price of stock in failing video-game retailer GameStop, and after it subsequently limited the buy-side of trades in a move that was seen as protecting powerful hedge funds. Customers have also complained of being locked out of their accounts and being unable to reach Robinhood customer service.
"I have money in my Robinhood account that I need for living expenses," says Rayz Rayl, a professional poker player and father of three from Indiana who drove 2,400 miles to protest. "My money is currently held hostage by Robinhood, I can’t get it out," he tells CNBC. (Not long after CNBC reached out to Robinhood for comment on Rayl's case, he was contacted by customer service and reportedly his access was restored.)
Robinhood is a popular startup that has been seen as democratizing investing for small-time investors, but many of those who were most active on it and who took part in helping the "short squeeze" on GameStop two weeks ago have now soured on the company. As CNBC reported on January 28, Robinhood abruptly halted customers' ability to trade in certain stocks that were being heavily shorted, allowing them only to sell their positions and not buy new shares.
"We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR and $TRVG. We also raised margin requirements for certain securities," the company said in a statement.
Rayl said that he had lost $50,000 on Nokia stock, which was another company that traders had hyped on Reddit and elsewhere as one whose shares were being shorted by large investment firms.
Investment experts warned throughout the week of GameStop's meteoric rise in share price — it was trading around $500 at one point, after shares worth only $40 just weeks earlier — that while large hedge funds might be taking a bath on their significant losses, the ones most likely to suffer the most would be the small-time investors themselves. This was especially going to be true for anyone who jumped on the bandwagon late and did not offload their shares before the price inevitably dropped.
Shares in GameStop fell 44% on Jan. 28, the same day that Robinhood limited customers' ability to sell.
Robinhood's move was seen by politicians on both the Left and the Right as damaging and unfair for consumers — notably Senator Ted Cruz tweeted his agreement with a statement about Robinhood by Rep. Alexandria Ocasio-Cortez.
But the startup maintains that all users sign an agreement in which the company maintains the right to limit trading in any securities at its discretion. Legal experts concur that brokerage firms have this broad discretion, and recent lawsuits against Robinhood by angry traders likely will not prevail.
Robinhood last made national headlines in November 2019 when Redditors — from the same WallStreetBets subreddit that launched the GameStop frenzy — discovered a loophole in Robinhood software that allowed them to trade with "infinite leverage," which in some cases allowed for gigantic gains and losses for these small-time investors. One trader claimed he took a $1,000,000 position in a company with only a $4,000 deposit. Robinhood closed the loophole days later.
Top image: A chalk drawing referencing Vladimir Tenev, the co-founder of trading app Robinhood, is visible on the sidewalk in front of the company's headquarters on February 01, 2021 in Menlo Park, California. Robinhood announced on Monday that it has raised $3.4 billion amid a trading frenzy in the past week. (Photo by Justin Sullivan/Getty Images)