Robinhood goes down amidst GameStop trading chaos

Stock-trading app Robinhood went down for some users during Wednesday amidst the trading chaos surrounding GameStop, according to a Motherboard report.

Several users reported on Twitter that they had issues accessing Robinhood’s services as the GameStop stock continued to surge due to members of the WallStreetBets subreddit pushing the price higher.

“Equities and options trading through our iOS and Android apps were fully operational, but some customers may have briefly experienced difficulties accessing our web app this morning,” Lavinia Chirico, product communications lead at Robinhood, told Motherboard in an email.

“Our crypto trading platform, Robinhood Crypto, experienced a disruption in service which impacted crypto trading for some customers – which has also been resolved.”

The news comes after small investors had teamed up on the WallStreetsBets subreddit to support the stock, betting against massive hedge funds such as Melvin Capital and Citron who had bought into the idea that GameStop would collapse. The hedge funds have faced billions in losses as a result, according to The Guardian.

GameStop, the gaming store, had previously been seen as one of the big losers from the pandemic as people were less willing to go to physical stores to buy their games, accelerating the death of the high street reported on for years prior to the Covid-19 crisis.

The surge in share price has also meant that the biggest shareholders, such as Ryan Cohen and the founder fo Credit Acceptance Corp Donald Foss, have made billions from the chaos.

Other winners include investor BlackRock, which also owns shares in GameStop.

This is not the first time that Robinhood has faced reports about outages in its service.

Robinhood suffered several major disruptions to its services in 2020, leaving customers furious as they couldn’t make trades.

The biggest two outage occurred in March, one of which left users without access to their accounts or the ability to trade for two days.

The problem was blamed on stress on the infrastructure, caused by “highly volatile and historic market conditions, record volume and record account sign-ups.”

Essentially, the Covid-19 pandemic caused a lot of trade which the company’s infrastructure couldn’t handle.

“When it comes to your money, we know how important it is for you to have answers,” Baiju Bhatt and Vladimir Tenev, co-founders and co-CEOs at Robinhood, said in a public apology. “The outages you have experienced over the last two days are not acceptable and we want to share an update on the current situation.”

In May the company witnessed another issue with its servers, but it was fixed in a more timely manner. Customers were left without access to their accounts for a matter of hours.

Despite these outages, Robinhood became a decacorn in September after pushing its Series G round to $660m after closing it on $200m in August, which had brought its valuation to $11.7bn.

Copyright © 2021 FinTech Global

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