Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

twitter.com

Post reply on HN
Print view View original

751–760 of 1001 posts

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

#751

Post by tartoran »

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…

> 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 the price?

If this is accurate then your question makes sense. Why? But how do we know this is real though? They could play games as well and I'm sure they do. Stock trading is gambling.

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

#752

Post by AndrewBissell »

JumpCrisscross wrote: post #725
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…

> Citadel also bailed out Melvin fund for their short position in GME. So, Citadel has an interest in not letting the price go up any further. Citadel bailed out Melvin Capital. Not its position. Melvin doesn't have a short position anymore. Melvin made a stupid bet. Citadel bailed them out. Private sector bailouts aren't free: Citadel got its pound of flesh. Even if they bought the entire portfolio, that portfolio n…

I certainly get pulling the plug on options, but I don't understand how the volatility in $GME would lead a market maker to simply stop quoting the underlying stock altogether. If the price starts flying around you just widen your spread. If there's too much pressure on the buy side and you can't keep your position neutral, you just raise your offering price until you're not selling shares at too fast a rate anymore.

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

#753

Post by corty »

infogulch wrote: post #728
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…

Fix: fines should be 2x more than just taking the loss on the chin.

Problem is, the losses will never really be known. Shorts have an arbitrarily high loss potential, but nobody knows how high GME would have climbed without Robinhood manipulating it down.

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

#754

Post by variaga »

aphextron wrote: post #543
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)? Robinhood operates a lot like Facebook. The "Gold" subscriptions and margin interest are tiny portions of their actual revenue. We are not their customers, we are the product. They offer free trades in exchange for selling order flow data to hedge funds, which in turns allows them to manipulate the markets. Of course they would protect their ac…

This is the correct take.

If you thought free brokerage accounts with no-fee transactions was too good to be true... you were right! There was a catch, and this is it.

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

#755

Post by lovehashbrowns »

thepasswordis wrote: post #25

Ah cool so does this mean that all the other stocks are safe and will only make me money? Very cool of Robin Hood to protect me from ever being exposed to any risk like this. It’s just really cool to know that they remove the ones that can lose me money.

Robinhood determined that you're too poor to mess with the market. Sorry about that!

This whole thing is such bullshit.

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

#756

Post by dehrmann »

JumpCrisscross wrote: post #725
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…

> Citadel also bailed out Melvin fund for their short position in GME. So, Citadel has an interest in not letting the price go up any further. Citadel bailed out Melvin Capital. Not its position. Melvin doesn't have a short position anymore. Melvin made a stupid bet. Citadel bailed them out. Private sector bailouts aren't free: Citadel got its pound of flesh. Even if they bought the entire portfolio, that portfolio n…

> The chances that a fund the size of Citadel has any strong opinion on the direction of GameStop stock is vanishingly low

I didn't touch this in the first place, but once it was clear it was a short squeeze, nope, not gonna play that game. Just sit back and enjoy the show.

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

#757

Post by snowwrestler »

Loughla wrote: post #739
snowwrestler wrote: post #187

Earlier quoted context omitted.

The way to make money in a bubble like this is to sell right before the pop. At some point the word will go out that it’s over—“we won”—and everyone will rush to sell their GME and take profits. It’s not possible for all those people to succeed. Broker apps like Robinhood will be absolutely overwhelmed with sell orders, many of which will run into technical problems and/or no counter parties. A lot of people are goin…

>Companies learned that helping their customers shoot themselves in the foot can come back to bite them, even if it was all legal and what customers wanted at the time. What a dismissive, awful, terrible way to phrase this. Having parents that were nearly the victims of one of those upside down mortgages, it's not that simple. They didn't ask for a 400k mortgage. They asked for a home they could afford. When the bank…

I understand you. Many of the people seeing news stories or social media posts today about buying GameStop are also unsophisticated. Brokers may be thinking it is in their self-interest to not just execute every buy order in an obviously inflated stock.

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

#758

Post by esoterica »

Loughla wrote: post #739
snowwrestler wrote: post #187

Earlier quoted context omitted.

The way to make money in a bubble like this is to sell right before the pop. At some point the word will go out that it’s over—“we won”—and everyone will rush to sell their GME and take profits. It’s not possible for all those people to succeed. Broker apps like Robinhood will be absolutely overwhelmed with sell orders, many of which will run into technical problems and/or no counter parties. A lot of people are goin…

>Companies learned that helping their customers shoot themselves in the foot can come back to bite them, even if it was all legal and what customers wanted at the time. What a dismissive, awful, terrible way to phrase this. Having parents that were nearly the victims of one of those upside down mortgages, it's not that simple. They didn't ask for a 400k mortgage. They asked for a home they could afford. When the bank…

If you agree that a bank should engage in paternalism and tell people what they can and cannot afford then why shouldn't Robinhood also engage in paternalism and tell people what stock they can or cannot buy?

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

#759

Post by kart23 »

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…

https://cdn.robinhood.com/assets/robinhood/legal/Robinhood%2...

Read section 16.

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

#760

Post by whimsicalism »

dehrmann wrote: post #749
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…

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 ar…

> directly through the market

There is nothing but the market makers.

> I assumed Citadel would actually be cleaning up market making GME with all the trading and volatility, but maybe the trades are too coordinated

I suspect they are still making bank. The demand for liquidity has increased, so there is a higher premium on liquidity provision.

Post reply on HN