Fascinating. I have been a serious investor my entire adult life, and have never heard of a brokerage firm imposing their own "circuit breakers" This stinks to high heaven, and needs to be fully investigated. I don't have proof, but I would bet good money that there are some panicking Hedge Fund Shorters calling in some favors.
Today, Robin Hood suspended the purchase of these stocks, but not the selling. Someone has already filed a lawsuit against them for violating their own EULA. The effect of their purchase suspension was to drive down the price. As
@catfish1957 called it, someone called in some favors.
But this violates equal protection. The pajama investors should have the same access to the market as the hedge fund folks. The hedge funders are the ones who have driven up the price through their demand to cover their short sells. They wanted less competition for those shares, hence they limited other peoples' ability to buy. Yet it is the pajama investors who are being accused of manipulating the market? Please.
Another item that made this all possible is that the quantity of stocks that these hedge funds shorted exceeded the total number of outstanding shares. Let's say there are 12 million shares outstanding and there are three hedge funds. The first hedge fund goes to Brokerage House A and borrows 5 million shares to be paid back in two weeks. That hedge fund then sells those shares at $5/share to Brokerage House B. The second hedge fund then goes to Brokerage House B and borrows those same 5 million shares to be paid back in 2 weeks and sells them to Brokerage House C at $5/share. The third hedge fund approaches Brokerage House C and borrows the same 5 million shares, and sells them to Brokerage House A. As far as the brokerage houses go, the actual stock is back where it started. Each brokerage house has paid out $25 million a piece. And each is owed 5 million shares of stock two weeks from now. That's 15 million shares total. But there are only 12 million shares outstanding. See why these guys are panicking?
They gambled. They lost. They each need to face the bookie.