Aussie share trading platform Stake has experienced a tech outage that saw users unable to trade throughout the US market opening, all on a massive day of trading Stateside.
Australian and New Zealand retail investors using the startup are not happy to be missing out on the action.
One customer on Twitter complained they were unable to sell their stock at peak price, meaning they lost out on some US$4,000.
Safe and secure my ass, couldnt sell the peak and lost US$4k and still couldnt sell and now the market closed and watching the aftermarket going down, you guys dont support aftermarket trading and even if you did, prob i wouldnt hav been able to sell either
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— Buzz (@itsJumaah) January 27, 2021
What a joke. This has been a frustrating night. Can’t buy or sell. Unable to cancel orders. Please fix this…
— Andrew Parker (@StiginJapan) January 27, 2021
Customers also complained about a lack of updates on the issue, with some concerned their money may not be safe.
Considering the last update was 4h ago. I think it’s time you gave your customers some assurance their money is safe and what is being fixed/ETA
— Chay (@chaydotcom0) January 27, 2021
At the time of writing, there still appears to be no information about the outage anywhere on Stake’s website. SmartCompany understands some customers have also receive no email communication on the situation.
In a string of tweets, Stake cited “unprecedented trade activity” which is placing “extreme strain on the global market infrastructure”.
It directed customers to an article from The Independent, which reports other platforms such as Robinhood and UK-based Trading 212 are also experiencing technical issues and glitches.
However, while other platforms appear to have been able to remain operational, SmartCompany understands some customers were not able to even log in to their Stake accounts during the US trading period, but could once it was over.
“Wednesday was the biggest volume day in the history of the US market,” Stake said in a company statement.
“This unprecedented, worldwide, trading activity is placing strain on the global brokerage infrastructure and causing widespread outages, by which Stake was affected.”
The global disruption is expected to continue, the statement added, stressing that its engineers are working to minimise the impact for Aussie users of its platform.
What’s going on on Wall Street?
For Aussie retail investors, Stake’s outage couldn’t have come at a worse time, as Wall Street goes all kinds of topsy turvy this week.
It’s all stemmed from a focus on bricks-and-mortar retailer GameStop, which has been performing less than optimally, recording losses of $795 million in 2019.
On January 11, GameStop announced it was appointing new directors to the board, including young guns with heaps of digital experience. That sparked a 13% jump in the businesses share price, as investors anticipated something of a reinvention project.
However, short seller Citron Research took aim at the struggling stock, with its founder outlining in a now-deleted video all the reasons he would be shorting it.
Short selling sees hedge funds or other groups borrowing shares in the belief that their value is likely to fall. The entity sells the borrowed shares, then buys them back at the lower price, thereby making money on the fall.
It’s a legal practice, but a controversial one. And this particular short has got millenials and other GameStop supporters particularly riled up.
Enter Reddit thread WallStreetBets — a public hub of tips and bandwagoning for Wall Street shares.
Here, high-net-worth individuals and private retail investors have rallied behind GameStop, leading to enough investment to inflate its share price considerably.
From just under US$20 on January 11, GameStop’s share price has soared to over $US350, and on Twitter, the likes of Elon Musk and billionaire tech investor Chamath Palihapitiya have piled on.
— Elon Musk (@elonmusk) January 26, 2021
Not only is this a boon to the business itself, but it also sticks a digital middle finger up to the short sellers.
One hedge fund, Melvin Capital, was also reported to have shorted GameStop. Now, that’s resulted in a $2.75 billion bailout as it struggled to buy back the shares at the inflated cost and exit its position.
The surge in stock activity has also spilled over to other dwindling stocks that have been targeted by short sellers, including Blackberry.
And, despite tech issues, shares in trade platforms like Robinhood have surged, even as the platform struggles to cater to the new demand.