\Fintech Analysis/

Reddit’s run on GameStop shuts down European trading apps

European trading apps like Trading212 have been hit by outages amid frenzied activity around GameStop shares driven by Reddit users.

By Chris Stokel-Walker

Member

Like many people, UK-based Sayem Ahmed saw an opportunity to strike it rich on social media this week. Ahmed, a marketing specialist, saw people talking on Twitter and Reddit about the rise of troubled US video game retailer GameStop.

Shares in the company have been propelled to highs of $372 a share, up from $17.25 per share at the start of 2021, as a result of a campaign by social media users.

Participants on the r/WallStreetBets subreddit, which offers stock tips, decided to push up the price of GameStop shares after seeing institutional investors trying to short the stock. The speedy rise in price gained mainstream media coverage, which encouraged amateur investors who use no-fee apps such as Trading212, Robin Hood and FreeTrade to buy in and benefit themselves.

Among them was Ahmed. “I missed out on the whole bitcoin phase and was kicking myself for it,” he says. “I had just been paid, and thought, ‘Why not go for it?’”

He opened a Trading212 account earlier this week, deposited £100 into the account, then split it into a few stocks recommended on Discord, a text and audio chat app used by gamers but also co-opted by r/WallStreetBets users — including 1.2 shares in GameStop. Then he waited.

The first night nothing much happened. But then on January 26, Ahmed’s girlfriend began laughing in the middle of their evening meal. She had spotted her boyfriend surreptitiously checking Discord and his stock prices. “I was really into it,” Ahmed admits. “I thought I was really making something out of this.”

Ahmed stayed awake until 2am that night, watching conversations about GameStop ping around social media. When he woke at 8am on January 27, he saw the price has surged in the aftermarket. “I thought, ‘Holy shit, this is turning into quite a sum I could get out of this. I could pay off a bit of my loan with this, or treat my partner to something nice.’”

When 2:30pm hit in the UK — 9:30am in New York, when the market opened once again on GameStop — he tried to log in to Trading212 to reap his reward. But he couldn’t. Something wasn’t right.

He was one of many investors looking to capitalise on the rise of the troubled US retailer stock price, but unable to sell out their positions due to outages on stock trading apps.

Trading apps experience technical difficulties

GameStop closed on January 26 at $145.96 a share, and a flurry of trading through stock trading apps pushed it up beyond $350 when it opened the next day. But the apps many people used to buy their shares struggled to keep up with demand, leaving some users unable to log into them. Some apps put a halt on handling any new orders for GameStop stock, meaning investors couldn’t close out their positions to make their profit. Some users reported losing out on up to £1,200 in potential gains due to not being able to complete trades.

“It seems to be something murkier”

Users on Trading 212, a London-based fintech, were confronted with the following message: “Our intermediary is experiencing difficulties in transmitting orders. Existing orders might be executed with a delay. Placing new orders is currently not possible.” The company did not respond to a request for comment, but warned users of service disruption and “login connectivity issues” in an update on their website.

TD-Ameritrade, a US-based trading app, said in a statement it was facing some issues with competing trades. Freetrade, a London-based competitor to Trading212, stated it had issues filling a small number of orders — “less than a thousand”, according to the company’s Alex Campbell — in a timely fashion at the start of the day’s trade in New York, though they were all filled by 3:15pm UK time. On Monday and Tuesday, Freetrade saw 177% more buy orders on GameStop by value than the entirety of last week — which was already high.

Another GameStop investor, who asked not to be named, found out about the potential for profit from Reddit and SomethingAwful, a website known for its comedy forums. He invested £1k in GameSpot on January 26 after seeing the stock rise in value. “I monitored after-hours trading, and was expecting to sell to make our stake back,” he explains. “Trading212 has refused to allow me to sell any shares from market open today.”

The investor was sceptical that the issue was with Trading212’s intermediary, Interactive Brokers. “Interactive Brokers shows no issues,” he says. “At first I thought Trading212 had been DDoSed by Melvin’s IT division,” believing that the investment firm most known for shorting GameStop had launched a coordinated attack against Trading212 — a claim for which there is no evidence. “But it seems to be something murkier,” the investor adds.

A spokesperson for Interactive Brokers told Sifted: “As a result of unprecedented market conditions, some of our clients may have experienced issues earlier today in placing orders in certain stocks. The issue has been fully resolved, and we regret any inconvenience to our clients.”

User frustration

Like Ahmed and many others who have taken to social media in the last few days, the investor is annoyed that he’s been unable to access his funds easily — but also like Ahmed, and those who caused the run on GameStop in the first place, he’s happy to see big finance struggling. “To be honest if this completely neuters short selling and causes them severe distress I’d be happy,” he says. “Extracting wealth from them is deserved post-2008 and beyond.”

“Extracting wealth from them is deserved post-2008 and beyond.”

Ahmed agrees with that. He also checked Interactive Brokers’ website and found nothing wrong. “Is someone at Trading212 scared of people in their 20s investing and actually making money?” he says. “Part of me got in it for the hype, but part of me did it for another reason. I hate billionaires. I don’t think they should exist. If I want to get in on this, why can’t I? Why are they scared now? Why is it that when someone like me tries to make some money, I can’t do it? If it was a hedge fund losing money, they’d be bailed out.”

So too does Oliver El-Gorr, owner of Freeman Publications, which supports retail investors getting better results from their financial portfolios. He’s a collateral victim of the great GameStop surge of 2021: while he doesn’t own a position in the company, he was confronted with a message from Freetrade warning about delays in stock trades around 4pm UK time (“no prizes for guessing what they were referring to,” he says).

So too was Tchi Mbouani, who tried to log into her Trading212 account around 2:40pm UK time to withdraw money to pay her self-assessment tax return before the January 31 deadline. She couldn’t do so until 6:30pm. “Simply a despicable service today,” she says. “It should never be allowed and they should be fined by whatever authority they are regulated.”

“I think it’s downright unfair that these platforms are happy to make money in scenarios that favour Wall Street and other institutions, but shut up shop as soon as the little guy stands a chance,” El-Gorr says. Asked if he had ever seen something like this before, El-Gorr responded with one word: “Never.”

Despite raising the hackles of casual investors, the halt on selling GameStop stocks shortly after it opened may have helped protect investments. Shortly after 7pm UK time, and four and a half hours after he wanted to sell some of his GameStop shares, Ahmed told me he had managed to offload some, buying stakes in other business tipped by the social media investors. “’Portfolio’ (lol) is at £286 and rising,” he dashed off in a quick message.

Chris Stokel-Walker is a tech reporter for BBC News, The New York Times and Wired. He tweets from @stokel

1
Join the conversation

avatar
  Subscribe  
newest oldest most voted
Notify of
Tiny Bee
Tiny Bee

I’m a Trading 212 investor. Since this debacle occurred, I’ve been unable to withdraw free funds from my ISA and Invest accounts to pay my tax return. I’ve emailed Trading 212 and received no response.