There’s been a surge of new retail investors questioning why they should ditch Robinhood or avoid it.
Seasoned retail investors holding AMC stock have been guiding newcomers in order to help them prepare and maximize their profits for when AMC squeezes.
I’m going to go through a number of reasons why new retail investors investing in AMC should avoid Robinhood.
If you hold AMC stock (or even GME stock) in Robinhood or are thinking of investing in AMC, then this article is perfect for you.
Welcome to Franknez.com – the blog where you can digest content on personal finance, stock, crypto, and trending investing news.
Lets get started!
If you’re new to the AMC community be sure to read the articles on the stock & crypto news as well as on the momentum stocks tab to catch up on everything there is to know about AMC’s short squeeze, market manipulation, and the stock’s data.
Robinhood App Origin
Robinhood is an American financial services company that was founded in April 2013 by Vladimir Tenev and Baiju Bhatt.
Robinhood is headquartered in Menlo Park, California.
The app was introduced in March of 2015 and offered commission-free trades of stock and other funds to its users making it an extremely attractive choice for new retail investors.
Robinhood for the most part had a very positive and outlook and following since its inception.
So, what happened to this beloved company and why are retail investors investing in AMC Entertainment staying clear from this trading application?
Lets get you caught up.
Robinhood Restricts Purchasing of GameStop and AMC Stock
Thursday, January 28th, 2021 – Robinhood halts purchasing of GameStop, AMC, and BlackBerry stock.
On Thursday, January 28th Robinhood announced it would restrict retail investors from trading in GameStop, AMC, and even BlackBerry stock.
This single handedly move would leave new retail investors baffled with their beloved trading application.
The catch with Robinhood trading halt
What left retail investors more puzzled was the fact that Robinhood halted the purchasing of ‘meme’ stocks but not the selling of them.
This halt affected GameStop’s momentum.
The act of selling would play in hedge funds’ favor.
Retail investors were quick to make their concerns public and went as far as to connecting the dots on their own.
The Reddit community suspected foul play and the information that was discovered only confirmed more market manipulation.
The Connection between Robinhood, Citadel, and Melvin Capital
The Reddit community discovered that Citadel is Robinhood’s clearing house.
This means that this hedge fund shorting AMC and GameStop stock has direct access to processing retail investors transactions.
Citadel lends money to Melvin Capital who shorts these stocks.
Both Citadel and Melvin Capital have denied having anything to do with Robinhood’s decision to halt trading but this connection has severed the bond between Robinhood and it’s users investing in AMC and GameStop stock.
Hedge funds lost billions of dollars when GameStop squeezed and are currently losing millions of dollars every day from holding AMC.
Read: When do shorts have to cover their positions? (AMC)
Robinhood Protects Hedge Funds
Vlad Tenev has denied the idea that halting trading was done in order to protect its hedge fund affiliates.
It’s from this simple statement that retail investors lost all respect for the Robinhood CEO.
Robinhood stands for taking from the rich and distributing the wealth amongst the poor.
Robinhood’s ethics shattered its trust with the Reddit community by proving otherwise.
Read: How do hedge funds manipulate the stock market?
When a public figure messes up big time, the first step towards correcting your mistake is to be honest about it.Frank Nez
Has the SEC done anything to regulate the manipulation?
In short, no. Members of the SEC have more than likely been lobbied to ease regulations.
The AMC community has recently gotten together and shared their concerns via Twitter generating the hashtag, #SECdoyourjob.
I wrote an in-depth article on the SEC which many in the community have shared and tagged them directly.
You can check it out here.
Since the publish of this article, we’ve actually seen the SEC raise some concern regarding the excessive shorting hedge funds continue to practice on both AMC and GameStop stock.
We’ve made some progress apes.
But we must not let off the gas pedal.
Warren Buffett expresses his concerns about Robinhood
Warren Buffett warns new retail investors the potential of losing a lot of money through Robinhood calling it a gambling app.
Graham Stephen goes more into detail about what Warren had to say during his annual conference and also provides insight on Robinhood’s cancellation.
Robinhood just got cancelled
This video goes into other details as to why Robinhood is losing its reputation other than the reasons mentioned on this article.
Why should retail investors investing in AMC ditch Robinhood?
AMC Entertainment stock has the perfect setup for a short squeeze. The biggest concern the AMC community has is that Robinhood is going to halt trading AMC stock once it moons.
If this happens, say goodbye to the opportunity of a lifetime.
What broker should I invest with instead?
There a numerous broker accounts you can use. I personally use Vanguard.
Some of you may know Vanguard from being one of the biggest AMC shareholders in the market.
They’ve been adding to their position all year and have proven to be an outstanding broker.
Here’s a list of other brokers you can use to invest in AMC:
- Charles Schwab
- TD Ameritrade
I published an article on how to invest in stock market step by step using Vanguard.
If you know friends or family who are curious about investing but haven’t pulled the trigger, link them to save you the time teaching them.
How to transfer stocks out of your Robinhood Account
If you hold AMC stock in a Robinhood account and are afraid they might restrict you when AMC squeezes, you can transfer your stocks out of Robinhood using their Automated Customer Account Transfers Service (ACATS) to other brokerages.
Note: If you transfer all of your assets over to another brokerage, Robinhood will close your account.
Is there a fee to transfer stocks out of Robinhood?
Yes. Robinhood charges its users a $75 fee to transfer your assets out of Robinhood.
How long does it take for my assets to transfer out of Robinhood?
Robinhood users are experiencing up to 4 days for their assets to transfer out of their broker account.
The time it takes for your assets to show up on your new brokerage account may vary.
What you can do to speed up the process is setup you new brokerage account ahead of time in order to avoid delays.
What if I miss AMC’s short squeeze?
Analysts such as Trey’s Trades are anticipating AMC’s short squeeze can last several days to even several weeks.
If you’re nervous about transferring your assets here are other solutions:
- Open an additional position with a different brokerage.
- Transfer some assets into a new brokerage.
AMC’s short squeeze is still unfolding.
The stock has the perfect setup and we’re finally beginning to see things play out in the retail investors favor.
Although we can’t calculate for certain the date the squeeze will occur, the data does seem to advise it’s close.
AMC short squeeze prediction
Although a short squeeze can happen at any moment, my instincts are telling me we could see this happen early 2022.
Will hedge funds move into 2022 facing losses again?
I think they’ll close leading into the new year.
Read: How soon will we see an AMC short squeeze?
Join the Discord community
If you found this article to be helpful, then be sure to join the Discord community.
This safe community is where new retail investors can get help from seasoned retail investors as well as communicate with me one on one.
Leave the community a comment below and share your story.
Are you having issues switching out of Robinhood?
How long did the process personally take you?
Let the community know bellow.
Twitter | Instagram | Facebook | YouTube
Support the blog on Patreon.
For many of us in Europe, what are your thoughts on Trading212 please?
Didn’t a huge lawsuit just come about with Robinhood surrounding this incident?
Yup, Robinhood is under intense scrutiny at the moment for market manipulation.