This week has been crazy for seemingly downsized companies that have been severely affected by the COVID-19 pandemic. Of course, we’re talking about GameStop and, to a lesser extent, companies like AMC Theaters and BlackBerry. It’s a long story, and we highly suggest that you follow our previous coverage if you’re new to the whole drama.
However, the Cliff Notes The previous version is that the Wall Street hedge funds are selling GME’s shares in the long run, in the hope of the eventual demise of the company so they can make billions of profits. The Reddit community’s WallStreetBets, however, decided to “Stick it to the man” by buying GME shares, which caused its stock price to skyrocket. GME, which was traded at less than $ 10 per share in mid-2020, is now trading at around $ 325. Needless to say, the “small” day traders who entered early have been banking, hedge funds are shaking in their boots and attacking in an epic way.
So, where does Robinhood and AMD influence all of this?
This leads us to Robinhood, who drew the ire of WallStreetBets, day traders and even legislators after announcing that he would be “restricting transactions in certain securities to closing positions only, including $ AAL, $ AMC, $ BB, $ BBBY , $ CTRM, $ EXPR, $ GME, $ KOSS, $ NAKD, $ NOK, $ SNDL, $ TR and $ TRVG. ”Robinhood said it was taking steps to protect its customers from” significant market volatility “, although most people dealing with these particular stocks knew exactly what were they doing.
The trade blockade caused GME and AMC shares to fall 21 percent and nearly 50 percent, respectively, on Thursday, before [mostly] recovering from those losses on Friday.
But one company that was caught in this short selling / WallStreetBets counterattack was AMD. AMD is a company that apparently has nothing to do with all the drama of GME (apart from making CPUs and GPUs that go to game consoles), but has also been placed on Robinhood’s restricted inventory list.
On Thursday and Friday, Robinhood limited its users to buying only a single share of AMD. As you might expect, there was an immediate outcry about this turnaround. Unlike GameStop, or many other companies targeted by Robinhood, AMD, in fact, has a solid financial base.
In fact, AMD witnessed a 45 percent increase in year-over-year revenue for 2020 and a 52 percent increase in full-year profit to $ 4.35 billion. All of AMD’s business units were on fire, from the standalone Ryzen and Radeon GPUs, to its semi-custom chips used on the PlayStation 5 and Xbox Series S / X, to its EPYC data center processors. Despite the big profit gain, AMD was greeted with a dramatic drop in its share price and subsequent interference from Robinhood.
Why is Robinhood targeting AMD now?
Redditor Bvllish was one of the first to draw attention to AMD’s contempt for Robinhood, and the play exploded, stating:
This is important because it is a blatant manipulation of AMD’s actions. By limiting purchases of a stock, Robinhood is creating artificial selling pressure that can lower the share price. AMD’s short-term interest (number of people betting that AMD’s stock price will fall) also rose last month. AMD is also one of the most owned shares in Robinhood. An attack on AMD’s stock is an attack on the company.
There has been a lot of activity around AMD over the past three weeks, with short interest rates having doubled from 52 million in early January to a current level close to 110 million. Given AMD’s financial boom, WallStreetBets and other brokers of the day are sniffing (or perhaps selling long positions at AMD to maintain liquidity after defeating GME).
Welcome to Endgame. from r / wallstreetbets
“Notice how [mainstream media] are saying that a winning streak was ‘expected’ to explain the [share price], “added zqv7.” And yet, there was no increase before profits to actually set the price. Suits covering suits. “
The battle against Robinhood and the shorts is not over
The popular opinion seems to be that WallStreetBets and its legion of self-labeled “degenerates” are preparing to push AMD’s stock, and Robinhood does not want to be caught off guard. However, these restrictions are only helping to further increase their users’ distrust of the company and the scrutiny of lawmakers, including the SEC – something that most commercial companies try to avoid at all costs.
Robinhood’s mockery grew in just a few days, as his actions – although legal – are at odds with a move that is determined to take on major Wall Street hedge fund firms. Degenerates are committed to supporting companies that are unlucky while earning some money for themselves.
Flown by Robinhood HQ from r / wallstreetbets
It appears that some “degenerates” are even using their newfound wealth to openly mock Robinhood in broad daylight (as witnessed by the video embedded above). This is a quick turnaround in luck for Robinhood, who has been praised for its ease of use and accessibility for casual merchants. However, the twist of Robinhood’s namesake to “steal from the rich and give to the poor” seems to have turned upside down here, which explains why his feet are now being brought to proverbial fire.
As of now, it appears that AMD has been removed from Robinhood’s list of restricted shares after the outcry, but we don’t know if that will still be the case tomorrow, when the market officially opens again. Whatever the outcome, the damage to Robinhood’s reputation has clearly been done, and it will be interesting to watch the fireworks if the SEC takes action against the company next.