Money and Markets

Reddit war: EasyEquities clients barred from buying Nokia

Business Insider SA
  • As GameStop's share price continued to plummet on Tuesday, South African members of the so-called Reddit Army may find it tougher to trade in Nokia, another popular target among day traders.
  • EasyEquities clients were informed that they won’t be able to buy Nokia shares for now.
  • Its US broker partner is not allowing any buys of the share, which is also being restricted by popular trading app Robinhood.
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EasyEquities clients won’t be able to buy Nokia shares, while the fight between retail investors and Wall Street hots up.

Millions of small investors have been buying GameStop shares to squeeze large hedge funds, who bet big money that the US retailer’s share price would fall.

As GameStop’s share price rocketed, small investors started looking for other targets. Along with BlackBerry and AMC, Nokia saw a sudden rush of buying. Its share price rallied, and last week it was the biggest gainer on European stock markets.

The Finnish cellphone producer’s share price had languished below €5 for years, after reaching €27 in 2007, before Apple, Samsung, and others started eating its lunch.

READ | Nokia shares jump as legacy tech brands become Reddit traders' new playgrounds

South Africans couldn’t trade GameStop via the low-price trading platform EasyEquities, a favourite with price-conscious local small traders who don't want to put down large deposits. Judging from the r/JSE_Bets Reddit discussion board – the local equivalent to the hugely popular WallStreetBets - many traders resorted to overseas platforms like eToro to buy shares in GameStop.

READ | Could a Reddit war come to the JSE?

But the local traders could join the so-called Reddit war by buying Nokia via EasyEquities – until Tuesday.

In a letter to clients, EasyEquities said that its US broker-dealer, DriveWealth, announced it won’t be able to support buys of Nokia.

“Given this DriveWealth-imposed restriction we will not be able to facilitate any further buying of Nokia shares.”

Pending buy orders were deleted before the US marketing open on Tuesday.

However, the closing and selling of positions in Nokia will continue via EasyEquities.

US commission-free trading app Robinhood – the go-to platform of the WallStreetBets brigade - also has restrictions on buying Nokia. Robinhood clients are also only allowed to buy one share of GameStop.

Robinhood blames "financial requirements" for the restrictions. It must maintain large amounts of capital to facilitate trades.

The Reddit war on short sellers took a dramatic turn this week as GameStop started to plummet. On Tuesday, the share halved in value in opening trade on Wall Street, falling to $117 – after almost reaching $330 on Friday. The share price surged 700% last week.

Nokia’s share price fell 7% on Tuesday.

(Compiled by Helena Wasserman)

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