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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

#821

Post by michaelmior »

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…

If that is the case, then it leads one to wonder why Robin Hood wouldn't come out and say so to avoid all the blowback they're getting. I suppose the obvious answer is that they don't want to burn bridges with Citadel.

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

#822

Post by foobarbazetc »

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…

Citadel != Citadel Securities.

Most clearing firms aren’t clearing GME or AMC anymore. It’s not just RH.

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

#823

Post by blablabla123 »

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…

To be honest I ignored the whole topic until today.

But in my opinion the rationale is obvious: you buy a stock, that means you provide that company with liquidity that they can use to operate and grow their business. I guess especially in the startup scene VCs and investors are in high regard since they believe in the future value and perhaps also the product of a company.

Example: imagine I'm a hedge fund and put so much money into company x that the stock moves up. The company probably thinks I gonna fund their business for a few years (remember, stocks are long-term investments). Stock rises, they do a few risky choices. Suddenly I pull back my money. That would suck.

I think options and futures have reasonable functions, especially to stabilize investments and raw material purchase. But speculation can easily get unreasonable, you basically speculate with the liquidity/credit of other companies that actually care what they do. The irony is that futures have been invented to stabilize food production, I think since almost 1000 years. But probably you don't want a large hedge fund play with this stuff.

Also to put on another perspective. People are crazy about fairness on markets, even the super free US market has strict cartel laws. On the other hand large funds like Blackrock are so large, they have government-like powers. They even have the power to decide whether companies should stay or steer away from coal energy. That's even worse than a monopoly.

https://www.spglobal.com/marketintelligence/en/news-insights...

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

#824

Post by matttb »

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…

> I don't think this was Robinhood's choice.

They sure made it sound like it was their choice. https://blog.robinhood.com/news/2021/1/28/keeping-customers-...

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

#825

Post by imtringued »

KMag wrote: post #815
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…

There are a couple of charitable explanations for Robinhood acting this way. One is that most Robinhood users probably under-estimate how quickly they can sell if the price turns around quickly. There might not be enough willing buyers for all of the Robhinhood users who might be looking to get out at the same time. Another thing is that I'm not a lawyer, but they could be worried that if the SCC finds the discussion…

Every short seller is a buyer. That's why people keep buying the stock. There are more buyers than sellers.

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

#826

Post by dang »

For pointers to other vertices of this story graph, see https://news.ycombinator.com/item?id=25933543.

As for this thread, it's got 1500+ comments. If you want to see them all you'll need to click through the More links at the bottom, or like this:

https://news.ycombinator.com/item?id=25941431&p=2

https://news.ycombinator.com/item?id=25941431&p=3

https://news.ycombinator.com/item?id=25941431&p=4

(Use your imagination after that.)

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

#828

Post by cft »

cft wrote: post #585
zarkov99 wrote: post #57

Sure. Robinhood got a call from someone very powerful in their circle, politely asking them to stop the amateur plebes from interfering with their professional market manipulation. We are taking about people commanding titanic amounts of capital and (indirect) regulatory power. Robinhood then had the choice, do we make enemies out of these people or do we just screw, er, I mean protect, our customers? Unburdened by a…

All robinhood orders go to Citadel for execution because that is how they make money. Citatel just bailed out Melvin who shorted GME https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddi... So the call to Robinhood was probably from Citadel. It's disgusting that instead of saying just this, they hypocritically "protected" their users.

To the two downvoters , this is 1h after I wrote the comment: https://twitter.com/justinkan/status/1354853920762253315

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

#829

Post by adrr »

game_the0ry wrote: post #717
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…

Wow. Just wow. As RH user myself, I did not have a clue I was actually doing business (indirectly) with Citadel. I'll be closing my RH account soon. For now, I'll be holding the line on GME.

I am curious about holding GME. Is your plan to keep it long term? If not what are you plans to unwind your positions? Certain price point? Certain time frame?
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