The GameStop bubble has not only turned Wall Street upside down, it has also unleashed the investment fever in the rest of the world, also in Spain. The news from the New York Stock Exchange has encouraged a good number of people to want to participate in the stock market game, hoping to get a slice of small stocks through platforms similar to Robinhood in our country.
The result is that the number of queries and registrations on these types of platforms has skyrocketed considerably in just a few days. One of those platforms, Ninety Nine, barely six months old, claimed to have experienced a 500% growth in the number of users, while it managed to manage operations worth 1 million dollars in just 24 hours, coinciding with January 28, the day that GameStop shares reached maximum of 483 dollars.
The euphoria has been generalized among other popular brokers in our country, although they are more reserved when giving figures. “These days we have registered an increase in the use of the platform but we cannot yet land in numbers because the data is being processed”, they assure from IG Spain. “In any case, we always advocate for calm in these moments of extreme volatility, since our main objective is to protect the investor from the potential losses that usually occur in these events, so we have not taken advantage of the boom to expand the customer base, “they add.
In XTB they assure that the increase in clients does not come from these last days, but from the beginning of the confinement at the rate of 1,500 new monthly accounts. The GameStop effect in his case it has been translated into trading volume. “Securities such as AMC or GameStop itself had residual trading on our platform until a few days ago, but everything that happened in the US caused them to be among the five most traded securities of the week in the 19 countries in which operates our platform “, he assures JoaquÃn Robles, an analyst at the firm.
The Robinhood case
The rise of GameStop’s actions has not gone unnoticed by anyone. A group of individuals organized on Reddit under the name of WallStreetBets organized a massive buyout of shares in the declining chain of stores to prevent the big mutual funds from taking a share of its decline. The latter had carried out a short investment strategy that guaranteed them juicy profits the worse the company’s shares performed.
To achieve their goal, WallStreetBets members and the legion of followers who wanted to join their cause mostly used the digital broker Robinhood. A broker is nothing more than a financial intermediary – it can be a natural person or a digital platform – in the purchase and sale of financial products and shares listed on the stock market.
In recent years, Robinhood and other types of virtual brokers have become popular because they charge lower commissions and require lower deposits to access their services. Robinhood himself has for years boasted the absence of commissions and democratize investment for everyone.
Restrict operations
However, the fear of the possible consequences and the volume of operations around the shares of GameStop and other companies in distress such as AMC o BlackBerry made Robinhood restrict transactions and that sparked criticism from its users.
“They can be restricted if this option is included in the contract that is signed at the beginning, but it should not be done because it goes against the interests of the markets,” says JoaquÃn Robles.
The speculation risk made some platforms suspend the negotiation of companies like GameStop in Spain to protect their own stability and that of customers. “These bubbles imply very high risks for small investors, they can lose a lot of money and some are not aware,” say financial sources consulted. Other brokers they came to suspend subscriptions of new clients to avoid those who were attracted to the boom and speculation.
The other risk posed by an exorbitant volume of transactions is that the platforms do not have technical capacity to withstand them. Several of them fell during some sessions, although others like Ninety Nine, presume to have endured the pull. “As is normal in the Stock Market, when there are moments of compulsive investment like this, the investment platforms tend to freeze or slow down their correct operating times. However, in our case, the platform worked perfectly and allowed its users operate with total normality in shares such as AMC, which accounted for a large part of the sales during some of these days, “he says Javier Sanz, CEO of the firm.
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