Robinhood on Tuesday eased its trading restrictions on stocks that had been caught up in the short squeeze, after the online brokerage received a $3.4 billion injection of capital since Thursday.
Customers can now hold as many as 100 shares and 100 option contracts of videogame retailer GameStop (GME) - Get Report; up to 1,250 shares and 1,250 option contracts of theater chain AMC Entertainment (AMC) - Get Report and up to 3,000 shares and 3,000 option contracts of retailer Express.
Restrictions on trading headphone specialist Koss (KOSS) - Get Report, security-software provider BlackBerry (BB) - Get Report and content and brand manager Genius Brands (GNUS) - Get Report have ended.
GameStop recently traded at $109.06, down 52%. AMC traded at $7.82, down 41%.
If customers’ existing positions stand over the limits, the positions won’t be sold, “outside of our standard margin-related sellouts or options assignment procedures,” Robinhood said on its website.
Robinhood has said it was forced to impose its trading restrictions last Friday, forbidding buying of GameStop and others, because of collateral requirements.
“Simply put, Robinhood limited buying in volatile securities to ensure it complied with deposit regulations,” the brokerage said on its website on Monday.
“To be the trusted and responsible platform you can rely on, Robinhood has to operate within the existing regulatory environment. We have to make progressive strides while simultaneously complying with laws and regulations outside of our control.”
Meanwhile, Robinhood continues to plan for an initial public offering, possibly around May, knowledgeable sources told Bloomberg.
One source said there’s a chance Robinhood will instead go for a direct listing or merger with a special purpose acquisition company to avoid the bureaucracy of an IPO.
An IPO would bring in more capital and allow longstanding investors to cash out. Robinhood has planned an IPO for May since last year, sources told Bloomberg.