Online brokerages Robinhood, Charles Schwab and others were hit by outages again as the markets continued to reel and amateur traders on Reddit fueled the rapid rise of GameStop and other stocks, according to reports on Wednesday (Jan. 27).
Troubled video game retailer GameStop saw shares escalate almost 2,000 percent since the start of 2021. The share price moved beyond $350 on Wednesday.
Mobile app disruptions in service, possibly caused by high trading volumes, prompted Schwab’s TD Ameritrade to limit transactions on shares of GameStop, AMC and others, Bloomberg reported. “We made these decisions out of an abundance of caution amid unprecedented market conditions and other factors,” TD Ameritrade spokeswoman Margaret Farrell told the news outlet.
Schwab said clients were experiencing trouble amid “heightened trading across the market,” spokeswoman Mayura Hooper said in an email to Bloomberg.
GameStop shares have been a favorite of members of the Reddit forum WallStreetBets, according to reports, with investors flooding the market and driving up prices. Last week GameStop went up 69 percent, and on Monday (Jan. 25), the company’s trading was stopped nine times, The Verge reported.
The Reddit forum WallStreetBets describes itself as being “like 4chan found a Bloomberg Terminal.” Redditor u/delaneydi was the first to argue that GameStop shares were underpriced by the market, per The Verge. Day traders like the investors on r/WallStreetBets are usually not taken seriously by professional traders.
GameStop’s escalation on Wednesday (Jan. 27) was also thought to have been triggered in part by a Tuesday (Jan. 26) Tweet at end of the day by Elon Musk, CEO of Tesla and SpaceX.
Two Robinhood outages in March happened during a rally that saw stocks soar by more than 4 percent. Robinhood said at the time that the outages were tied to “instability in a part of our infrastructure that allows our systems to communicate with each other.”
A November surge in the markets also led to outages among some online brokers like TD Ameritrade, Charles Schwab and Vanguard.
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