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Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

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Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#741

Post by hchz »

darkwizard42 wrote: post #695
kart23 wrote: post #658

Earlier quoted context omitted.

Its a private company providing a service for FREE. YOU ARE THE PRODUCT. Just like twitter, they are allowed to control what happens on their platform, and they make no guarantee about reliability or free trade.

This is not even accurate in the smallest sense. This is a brokerage firm. It is heavily regulated by financial law. They are not "allowed to control what happens on their platform." in the sense of Twitter. They have a fiduciary responsibility to their clients and the reliability of their platform is actually part of their ability to operate as a brokerage. The service being free or not has NO impact on the rules th…

Sure, it's regulated, but which regulation states they have a fiduciary duty to you?

Given they are currently arguing in court they have no such duty, but only to act in their customers best interest, perhaps this isn't sufficiently clear to them.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#742

Post by MrMan »

fasteddie31003 wrote: post #118

To be clear I bought puts on GME yesterday, so this will work well for me, but it is totally unfair by Robinhood. I will be cancelling my Robinhood account after this show of force.

use a better broker! dont be a mark

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#743

Post by esoterica »

wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

> Why should Robinhood pick a winner (siding against their own customers)?

They're not siding against their customers. The median Robinhood trader that buys in at $350 is going to be left holding the bag when the price drops back down to $10. You can argue whether or not the paternalism is good or bad, but this is obviously going to on net stop more people from losing money than making money.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#744

Post by kgwgk »

lovehashbrowns wrote: post #732
kgwgk wrote: post #631

https://twitter.com/AOC/status/1354833285386543105 "Committee investigators should examine any retail services freezing stock purchases [...] especially those allowing sales, but freezing purchases." Apparently she would prefer that people were blocked from selling their holdings.

That is not what that tweet is saying. She is saying that particular pattern, sales allowed but purchases are restricted, is especially deserving of an investigation.

I don't know. If they had restricted sales I think that would be much worse. That particular pattern is the only pattern that could exist in practice.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#746

Post by bufferoverflow »

notahacker wrote: post #685
pdevr wrote: post #50

99.99% (or more) of people who buy lotteries, lose ALL their money. However, government allows anyone to buy them. There is no meaningful restriction for an assured destruction of wealth for most of those who buy them. While this GME/AMC run will not end well for many people, restricting people from buying those stocks - whether it is through actions of trading platforms or governing agencies - smacks not just of pat…

99.99% of people who buy lotteries know it's a gamble rather than a moneymaking strategy. Nobody is advising people buying lottery tickets that they should borrow money to buy as many of them as possible because they will make a nice easy profit at the expense of the rich. It's often said lotteries are a tax on people that don't understand probability, but at least people playing don't think they're doing arbitrage.…

> Nobody is advising people buying lottery tickets

That's demonstrably false. There are literal ads on TV that show how wealthy you can become if you just buy a lottery ticket.

> that they should borrow money to buy as many of them as possible because they will make a nice easy profit

You clearly haven't read any of the GME threads on WSB. Pretty much everyone is saying to only invest what you can afford to lose. Most people are buying small amounts just to f##k with the hedge funds, and they are outspoken about it.

> but at least people playing don't think they're doing arbitrage.

Buying a lottery ticket for a dollar, hoping they make much more? Isn't that the whole point of a lottery?

> And governments often do restrict other forms of gambling associated with more problematic losses.

That's the whole point of the criticism that you're missing. These restrictions are completely arbitrary and don't follow any rules.

You can go to a casino and lose your life savings.

You can buy 1 million lottery tickets and lose your life savings.

You can buy one of thousands of penny stocks and lose your life savings.

The government won't stop you. The brokers won't stop you.

But suddenly, when a big hedge fund is caught with their pants down, people like you come out and pretend like what's happening is a big problem, and we have to stop the trading "because some people can lose money".

Sorry, I'm not buying your narrative at all.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#747

Post by alexggordon »

fairity wrote: post #654
amai wrote: post #611

"Robinhood got about 40% of their revenues from one of the hedge funds that just took a dive on Gamestop. Highly recommend an investigation. This smells like collusion to protect the rich insiders." https://twitter.com/mindmeld_me/status/1354807424998281217

Is there a source for the 40% figure? It seems to allude that the fund in question is Citadel.

First, I believe that number comes from this article[0], which doesn't tell the whole story. Did some research and found some more info with the help of this article[1]. In Q1, Citadel paid $12,583,220.60 to fulfill orders from Robin Hood[2]. I can't put together the total percentage of their order fulfillment revenue, but this website seems to suggest 91 million[3], but if you add up the totals from[2] they don't sum to 91 million--so I can't quite determine the percentage of revenue it works out to, but it appears Citadel is their biggest order fulfillment client.

[0] https://www.bloomberg.com/news/articles/2018-10-15/robinhood...

[1] https://fortune.com/2020/07/08/robinhood-makes-millions-sell...

[2] https://cdn.robinhood.com/assets/robinhood/legal/RHS%20SEC%2...

[3] https://www.businessofapps.com/data/robinhood-statistics/

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#748

Post by tsdlts »

whimsicalism wrote: post #713
beachwood23 wrote: post #673

Earlier quoted context omitted.

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

I'm just not really sure I understand the narratives being thrown around right now, and I'd like to think I understand the economy somewhat Melvin Capital closed out their short position yesterday with a large loss - and Citadel helped cover that loss. As far as I know, Citadel and Melvin Capital no longer are holding any short positions in Gamestop. So what do they have to gain, by your narrative, from suppressing t…

They didn't tell you how much of the position they closed out on. They can say "they closed their position" even if they only closed out on 1% of it.

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#749

Post by dehrmann »

beachwood23 wrote: post #673
wyldfire wrote: post #26

Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…

I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…

Can most brokers route trades directly through the market or use another market maker if something like this happens?

I assumed Citadel would actually be cleaning up market making GME with all the trading and volatility, but maybe the trades are too coordinated. What they're paying for is order flow from unsophisticated investors; they don't want to deal with hedge funds and the games they play. Maybe these trades are close enough to something a hedge fund would do, so the orders aren't worth it?

Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop

#750

Post by iso1631 »

CryptoBanker wrote: post #494
sltkr wrote: post #330

Earlier quoted context omitted.

> If the short sellers think the stock is overpriced, and there's others that think its underpriced, then both sides are placing their bets and will deal with the result, either by making or losing a lot of money. I don't think it's really a case of people disagreeing on the real value of GameStop stock. Framing it like this ignores important facts. This stock was trading around $4 in August, around $20 in the beginn…

A stock is worth what people are willing to pay for it...

A stock is worth what people are willing to sell it for
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