Square Stock Rises As Traders Speculate Frustrated Robinhood Users Could Switch To Cash App

Square Inc SQ shares traded higher Thursday, and Robinhood restrictions on buying popular WallStreetBets stocks like GameStop Corp. GME and AMC Entertainment Holdings Inc AMC could be driving the Square buying.

What Happened? The trading restrictions have angered Robinhood users, many of whom have taken to Twitter and other social media platforms to complain. Most other major brokers have also banned buying of these popular stocks.

Why It’s Important: Robinhood has branded itself as an anti-Wall Street platform, so backlash against the platform has been quite strong.

See also: Robinhood Alternatives

Traders may be speculating that many Robinhood users will switch to Square’s Cash App Investing platform as an alternative to Robinhood.

Square also reportedly restricted trading in GameStop and AMC on Thursday, but traders fed up with Robinhood may still switch platforms just to make a point.

Cash App is geared toward younger, more inexperienced traders, so there is tremendous overlap with the Robinhood user base.

Cash App has seen its active user base more than triple in the past two years to about 24 million people. Cash App Investing is a new addition to the app launched in December.

Like Robinhood, Cash App Investing has no commissions and is extremely easy to use. Cash app also offers the ability to by fractional shares in high-priced stocks like Amazon.com, Inc. AMZN, another perk for small-scale retail investors.

Square stock is also a popular investment among Robinhood users according to Robinhood stock ownership metrics that the company stopped making public in the late 2020.

SQ Price Action: Square shares were up 8.94% at $220.27 at last check. 

Benzinga’s Take: Anthony Denier, CEO of Robinhood competitor WeBull, clearly communicated on Benzinga's ZingerNation Power Hour that WeBull's clearing firm is no longer supporting clearing in GameStop and AMC shares, so their hands are tied.

However, Robinhood launched its own in-house clearing system back in 2018, so it cannot simply pass the blame on to a third-party clearing firm.

Courtesy photo.