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Robinhood, Webull, Others Block Access To Penny Stocks Today

Penny Stocks On Robinhood, Webull & Other Platforms Have Access Blocked

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Closing Transactions Only For These Penny Stocks

In a relatively sweeping and unified move by several brokerages, access to volatile stocks was barred on Thursday. Apps like Webull and Robinhood had a growing list of penny stocks and even blue-chips restricted from opening orders. As of 11:50 AM EST, Robinhood blocked opening trades on more than a handful of stocks.

Robinhood Stocks Blocked From Opening Trades

Those are just on the list of current or former penny stocks meeting the $5 & under range in the last few weeks. Other blue-chip stocks, including BlackBerry (NYSE: BB) and Bed Bath & Beyond (NASDAQ: BBBY), among others, were also blocked.

In a blog post from Robinhood, the brokerage app said:

“Our mission at Robinhood is to democratize finance for all. We’re proud to have created a platform that has helped everyday people, from all backgrounds, shape their financial futures and invest for the long term.”

The post continued is emphasizing the importance of information. Robinhood aims to provide educational resources and ways for its users to make sense of the market. But as to a reason behind restricting access, Robinhood simply stated it was due to increased volatility

We continuously monitor the markets and make changes where necessary. In light of recent volatility, we are restricting transactions for certain securities to position closing only, including $AAL, $AMC, $BB, $BBBY, $CTRM, $EXPR, $GME, $KOSS, $NAKD, $NOK, $SNDL, $TR, and $TRVG. We also raised margin requirements for certain securities.

Webull Closes Access To Penny Stocks

Robinhood penny stocks weren’t the only ones getting a restriction. Webull also closed off access to certain names. In a mirror move to Robinhood, the app tweeted that it also blocked access to AMC, Koss Corp., and GameStop. In its tweet, Webull said that it no longer allows clients to open new positions in these stocks “due to the extreme volatility” in those symbols.

Other retail brokers this week also placed restrictions on some of these WallStreetBets stocks. TD Ameritrade and Charles Schwab also joined the party. But the question now is, was it called for? Everyone from Mark Cuban and Dave Portnoy to Elon Musk, Chamath Palihapitiya, and Alexandria Ocasio-Cortez expressed their frustration with the moves.

Senator Elizabeth Warren, Democrat of Massachusetts, called on the Securities and Exchange Commission to be more stringent when it comes to regulation as a whole.

“For years, the same hedge funds, private equity firms and wealthy investors dismayed by the GameStop trades have treated the stock market like their own personal casino while everyone else pays the price. It’s long past time for the S.E.C. and other financial regulators to wake up and do their jobs.”

Reddit Stocks Take A Dive

While this is the current case for many actively traded stocks, the results have been shocking for some. GameStop fell more than 50% from its high, Express went from $13.97 to lows of $3.40, and the rest of this list of penny stocks (both current & former) plummeted into a sea of red.

Can an argument be made that this was a means to protect the public mom and pop trader? I’ll leave that up to you, and please leave a comment below. The goal of organizations like the SEC is to uphold an orderly market. As Chamath Palihapitiya recently stated, many hedge funds are feeling the pain after the surge in Reddit penny stocks and blue-chips this year.

In a tweet on January 27th, Palihapitiya posted:

“OH from a Prime Broker:

  1. biggest 4 day de-grossing from hedge funds they’ve ever seen.
  2. Multi strats lost last week; traditional L/S guys this week. Hearing funds down anywhere from high single digits to 25%+ YTD.

Markets only down 2.5% so retail buying as funds selling.”

So what comes next for markets & can these Reddit stocks recover? Surely we will see the outcome of these events sooner or later. In the meantime, many traders are left in limbo over whether to sell or hold. Many of the intergalactic moves that these stocks have made are now muted in the wake of brokers’ moves this week.

Where Do You Stand?

We want to hear from you. Are you someone who’s trading penny stocks on Robinhood, Webull, TD, Schwabb, etc.? Was this a valid move to protect traders and the markets? Furthermore, what is your plan if/when these stocks become fully tradeable again? At the end of the day, you can do all the DD possible, study charts, become fully educated, and the like. But if a brokerage decides to shut down access to allow you to freely trade (buy/sell) stocks, what do you do, and are there any repercussions to these events for brokers?

New To Trading Penny Stocks?

If you’re new to trading penny stocks there are a few things that might help get you started on the path of education.

There’s plenty of things you can do to learn how to trade penny stocks effectively, efficiently, and become consistently profitable too. Take your time and even try trading with a simulator first in order to hone your skills before using real money.

By J. Samuel

As a trader and expert finance writer, I enjoy finding new and emerging trends that may have been overlooked by the average masses. If there's one thing that a trader or investor wants to know, it's how to use valuable data to their advantage. My expertise is in uncovering this data and compiling it into actionable information. As a professional finance writer, I've contributed to many of the top finance platforms and pride myself on researching factual, publicly available information and using that in all of my articles.

4 replies on “Robinhood, Webull, Others Block Access To Penny Stocks Today”

Gotta love market manipulation! The 1% cant stand to lose money. These brokers are all in bed with them. Quite obvious isn’t it?

These are the same people that did insider trading and dumped a bunch of stock before the Pandemic. They were never prosecuted. Now, that the “little man” is getting a piece of the pie, they have limited sales. Did Robinhood have an issue with the 10 million new customers they have received over the last 10 – 12 months? Did they have any problem with the “new investors,” who were inexperienced, losing money in the stock market back in April and May 2020? No! But, when the newbies make money, it’s a problem.

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