The members of one of Facebook’s largest groups dedicated to the stock market were buzzing about AMC and Robinhood on Friday morning. The mood is a mix of excitement and anger.
“I’m not trying to count my chickens before they hatch, but does anyone have a realistic expectation of how much they think the price of AMC shares might go up if the shorts lose out today?” one user asked. In the next post in the feed, a user complained about hedge fund managers. There’s no diamond hand emojis, no slurs, and no aggressive internet memes, all features of the r/WallStreetBets subreddit, which has been a nexus of day trader activity. On Facebook, it's just a slowly-growing community full of day traders getting increasingly angry at Wall Street.
Robin Hood’s Stock Market Watchlist started in 2018. Now, at more than 181,000 members, it is one of the largest Robinhood and stock market dedicated Facebook groups. It’s private, heavily moderated, and its members are upset about what’s happened over the last few days. To recap, in brief: Day traders including many Robinhod users had pumped up GameStop and other stocks and saw massive gains, hosing a hedge fund along the way. Then, on Thursday, Robinhood cited market volatility and put restrictions on what stocks its users could buy.
“In the group, we have seen people talking about [the] government needing to step in, about class actions against [Robinhood], about how the rich are taking from the poor. About [Robinhoods] tied to Sequoia Capital which ties to the hedge funds,” Aakshay D Kripalani, who created and runs the group, told Motherboard over Facebook messenger.
It's been a rough few days for retail traders online. Discord banned the popular WallStreetBets server, citing hate speech and a violation of its terms of service on Wednesday. Robinhood stopped users from buying shares of AMC, GameStop, and other meme stocks on Thursday, due to a cash flow issue. Google deleted 100,000 negative reviews of the Robinhood app. Facebook also briefly shut down another popular group, Robinhood Stock Traders, saying the group had violated its policy against “adult sexual exploitation.”
Kripalani and the members of Robin Hood’s Stock Market Watchlist aren’t worried about censorship or being banned from the internet.
“We have an incredible team of moderators who scan posts and we have keyword alerts set up,” he said. “If we didn’t [do that] then yes, I would be. But if something picks up, we’ll turn everything to post approval.”
On Friday morning, Kripalani’s group was far more concerned over finding a place to buy AMC, holding the line, and losing positions they bought through Robinhood.
Kripalani started the group because of the promise of fee-free trading apps like Robinhood and Webull. “I knew we would have a generational boom like we did with Coinbase and crypto back in 2017,” he said. “But I knew it would be even larger, which it is. Money is tangible, crypto to many was and still is ‘internet play money.’”
But as the market got hot and WallStreetBets and other retail traders melted up GME on Thursday, Robinhood restricted certain stocks to sell-only. Users also reported having their positions closed out by Robinhood. Experts told Motherboard this was most likely due to so much buying volume, including margin trading, putting Robinhood in a precarious financial and legal position. As Robinhood CEO explained to Bloomberg: "Look, it is not negotiable for us to comply with our financial requirements and our clearinghouse deposits."
Predictably, restricting a stock at such a critical time did not go over well with retail investors. “This is an egregious act,” Kripalani said. “When you have AOC and Ted Cruz agreeing, you know something is up."
Kripalani stressed that Robinhood users were losing more than just GME positions. American Airlines was another WallStreetBets favorite, and trading on its stock was also restricted on Robinhood. "And many who have margin accounts are literally getting their positions auto closed by Robinhood. Because Robinhood is saying that due to market volatility they will force a position closure," he said. "So you allowed me to buy at $22, and are now forcing me to close at $18 and take a 20% loss.”
Users have already filed a class action lawsuit against Robinhood, alleging it abused its position to save investors at the cost of users by cutting off purchases of GameStop stock. "Robinhood purposefully, willfully, and knowingly removing the stock 'GME' from its trading platform in the midst of an unprecedented stock thereby deprived retail investors of the ability to invest in the open-market and manipulating the open-market,” the complaint said.
Dogecoin, a joke cryptocurrency caught up in the trading frenzy, is also a hot topic of conversation, and Robinhood's policy changes are stoking frustration. “Robinhood at one point decided to not let you buy crypto until your money settled,” a user said in the group. “They recently changed it,and even early this A.M. I was able to right after making an instant deposit...Went back to buy more on the dip...and see Robinhood has now changed their policy again...Since we are interested in it...they gotta do their best to shut us out huh?”
Robin Hood’s Stock Market Watchlist is a mix of hope and disappointment. There’s three genres of posts—stock advice and questions, people sharing their gains, and people sharing their anger at apps like Robinhood.
“I believe that the people who have been making billions and manipulating the entire market are angry that their plays could be limited,” Kripalani said. “Now they see that simple traders with a well established plan are able to outsmart them with a coordinated effort. These same guys caused the market crash in 2008 by over leveraging margin. They don't care about the people, they just want to line their own pockets.
“Look at GameStop,” he said. “If GameStop failed, 15,000 employees would lose their job. But these hedge fund managers would get a new yacht. They could not care less about the 15,000 employees getting $10 an hour. Their only interests are their own bank accounts.”