All eight stocks restricted for trading by Robinhood Markets Inc. on its platform closed below their respective opens today. Investors who bought the maximum allowable shares in each of the eight would have wagered $23,231.56 at the open and lost $714.56, or 3.1%, by the closing bell, assuming they did not adjust their positions throughout the day.
Koss Corporation, the Milwaukee, WI-based headphones manufacturer which gained nearly 1,800% in January, fell 45% from Friday’s close to start the month, the most of any on Robinhood’s restricted list. Yet with a two-share buy limit, users would have only lost $50 from the open.
Here’s how the eight stocks performed on Monday and how investors subject to these limitations would have fared.
Still, day traders with impeccable market timing would have preferred no limits to capitalize on large intraday swings. GameStop fell to $212 a share during morning trading only to later rise by more than 30% from its session low.
This wasn’t the first time Robinhood restricted buying. The company placed more lenient limits on a greater number of securities on Jan. 29: 13 at market open and 50 by mid-day. The original 13 securities performed even worse that day compared to Monday’s eight, with aggregate losses of 14.1%, or about $2,300 due to the higher buying limit.
CEO Vladimir Tenev defended his firm’s decision to temporarily impose trading limits in an interview with Bloomberg Television on Sunday. “Robinhood as a brokerage has financial requirements, including clearinghouse deposits,” said Tenev. “To protect the firm and protect our customers, we temporarily disabled buying in these securities.”
By late-day trading, Robinhood eased share limits for all restricted stocks.