AMD caught in WallStreetBets drama as Shady Robinhood dares to limit trading

This week has been crazy for seemingly broken businesses that have been severely affected by the COVID-19 pandemic. We are of course talking about GameStop, and to a lesser extent companies like AMC Theaters and BlackBerry. It’s a long story and we strongly suggest that you catch up with our previous coverage if you’re new to all of the drama.

However, the Cliff Notes The version is that Wall Street hedge funds have shorted GME shares for the long haul, in hopes of the eventual demise of the company so they can rake in billions in profits. The Reddit community WallStreetBets, however, decided to “stick with the man” by buying shares of GME, which has skyrocketed its stock price. GME, which was trading at less than $ 10 a share in mid-2020, is now trading at around $ 325. Needless to say, the “little guy” day traders who came in early have banked, while the hedge funds are shaking in their boots and lash out in epic fashion.

So where do Robinhood and AMD play a part in all of this?

This brings us to Robinhood, which angered WallStreetBets, day traders and even lawmakers after announcing that it would “restrict trading for certain securities to close positions only, including $ AAL, $ AMC, $ BB, $ BBBY, $ CTRM, $ EXPR, $ GME, $ KOSS, $ NAKD, $ NOK, $ SNDL, $ TR, and $ TRVG. Robinhood said it is making the decision to protect its clients from “significant market volatility,” although most of the people dealing with these particular stocks knew exactly what they were doing.

The trade blockade caused GME and AMC shares to fall 21% and nearly 50% respectively on Thursday, before [mostly] recover from those losses on Friday.

But one company that has been caught up in this short selling / WallStreetBets counterattack is AMD. AMD is a company that is apparently unrelated to all of the GME drama (aside from making the processors and GPUs that go into gaming consoles), but it was also placed on the restricted stock list of Robinhood.

On Thursday and Friday, Robinhood limited its users to buying only one share of AMD. As you would expect, there was an immediate outcry about this turn of events. Unlike GameStop, or many other companies that Robinhood targets, AMD actually has a solid financial base.

In fact, AMD saw a 45% year-over-year increase in revenue for 2020 and a 52% increase in full-year profits to $ 4.35 billion. All of AMD’s business units were on fire, from standalone Ryzen and Radeon GPUs, to its semi-custom chips used in the PlayStation 5 and Xbox Series S / X, to its EPYC data center processors. Despite the big earnings win, 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 among the first to bring attention to Robinhood’s lightweight AMD, and lambasted the move, saying:

This is important because it is a blatant manipulation of AMD’s stock. By restricting buying on a stock, Robinhood creates artificial selling pressure that can lower the stock price. AMD’s short interest (number of people betting that AMD’s stock price will go down) has also increased over the past month. AMD is also one of the most owned shares on Robinhood. An attack on AMD’s stock is an attack on the company.

There has been quite a bit of activity around AMD over the past three weeks, with short-term interest doubling from 52 million earlier in January to a current level approaching 110 million. Given AMD’s booming finances, WallStreetBets and other day traders are feeling a rat (or maybe shorts selling long positions on AMD to maintain liquidity after taking a beating on GME).

Welcome to Endgame. by r / wallstreetbets

“Notice how [mainstream media] say that a beat in earnings was “ expected ” to explain the [share price]”, added zqv7.” And yet, there was no progression before profits to make the price. Costumes covering the costumes. “

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 stocks, and Robinhood doesn’t want to be caught off guard. However, these restrictions only add to the mistrust of the company from its users and to the scrutiny of lawmakers, including the SEC – something that most corporations try to avoid at all. price.

Robinhood’s mockery developed in just a matter of days, as its actions – albeit legal – are at odds with a move determined to take on Wall Street’s major hedge fund firms. The degenerates are determined to support the businesses that are unlucky while making money for themselves.

Hovered over Robinhood HQ from r / wallstreetbets

It seems some ‘degenerates’ are even using their newfound wealth to blatantly mock Robinhood in broad daylight (as evidenced by the video embedded above). This is a quick makeshift about-face for Robinhood, who has been praised for its ease of use and accessibility to casual traders. However, Robinhood’s namesake twist of “robbing the rich and giving the poor” seems to have been turned upside down here, which is why her feet are now being held to the proverbial fire.

For now, it looks like AMD has been removed from Robinhood’s restricted stock list following the outcry, but we don’t know if that will still be the case tomorrow when the market officially reopens. Whatever the outcome, the damage to Robinhood’s reputation is clearly already done, and it will be interesting to watch the fireworks if the SEC takes action against the company next.