In order to actually short a company, you have to borrow shares and then sell those shares to someone else in order to make a profit. The coalition of small, individual investors also ended up causing billions of dollars in losses for extremely well-funded financial firms who were betting against GameStop’s stock. As a result, shares of the struggling brick-and-mortar video game retailer jumped by more than 14,300% last week before dropping down to less than $100 as of Wednesday’s close, according to CNET. The stock saga began after a legion of retail traders banded together in the WallStreetBets forum on Reddit and decided to invest in GameStop stocks in order to make money and troll massive hedge funds. Critics say Robinhood abandoned their customers in favor of giving hedge funds and other elite investors who had shorted the stocks in the first place an unfair advantage.
However, the popular free-trading pioneering app, which brands itself as a tool to help amateur traders, became the center of controversy after restricting trades on highly volatile stocks for retail investors last week.
Founded in 2013, the Robinhood app revolutionized the art of investing by giving the masses the ability to buy stocks on a whim.
