- "Meme stocks" like GameStop are available on Square’s Cash App platform.
- But today the app announced that purchases of AMC Entertainment and Nokia stocks had been halted by the clearing house.
- GameStop, AMC, NOK and other Reddit trades are tumbling in price.
Update: Just before 3pm ET, Cash App reported that its clearing broker, Axos, had "resumed the ability to purchase $AMC and $NOK."
Earlier today, payments platform Cash App had announced that its clearing broker stopped processing purchases of AMC Entertainment and Nokia stocks—two favorites of the WallStreetBets Reddit group—via its app.
The announcement came as GameStop, AMC and other stocks pumped on Reddit’s WallStreetBets forum came crashing down. GameStop stocks last week shot up by 352% in three days to as high as $347.51 as amateur online traders pumped the stocks. But today, the shares dropped more than 50% to $113.56.
During the frenzy, AMC Entertainment also hit highs of $19.90—but today plunged to $7.83.
“This was not Cash App’s decision—we disagree with this move wholeheartedly,” the app said. “We hope to make these stocks available for purchase again as soon as possible.”
Cash App, which also allows for cryptocurrency purchases, added that its clearing broker, Axos, only halted purchases and that sell trades still remain available.
Clearing brokers work to ensure trades are settled by providing funds in the form of deposits to support trades. Purchases of the stocks had been halted as central clearinghouse DTC increased capital requirements on Axos.
The move added further drama to the GameStop saga: last week, Reddit users united to buy up shares in companies that had previously been shorted by big Wall Street hedge funds.
Such shares were mostly from struggling companies, such as video game retailer GameStop and the movie theater chain AMC. Their move worked and caused pandemonium on Wall Street. One hedge fund, Melvin Capital, received an almost $3 billion bailout from two other hedge funds after closing out its GameStop shorts.
But the shares are now tumbling.
Cash App added that it had not yet been “provided with a clear path to fix this situation ourselves.” Representatives for Cash App did not immediate respond to Decrypt's request for further comment.