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

931–940 of 1001 posts

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

#931

Post by mgolawala »

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 am not an expert on this.. but here is a theory. Broker's are incentivized to have the short squeeze stop.

Someone please correct me if I am (or how I am) wrong with the following:

Bob is a broker.

Jack comes along buys 100 shares of X.

Bob lends those 100 shares of X to Amy to sell short.

Amy sells it short. Price shoots up.. Amy says “oh crap.. Sorry bill. Simply cannot buy back those shares. I am bankrupt. I physically do not have the money to do so.

Jack will still expect Bob the broker to make sure his 100 shares of X are there one way or the other.

Bob the broker has to buy back those shares it lent out to Amy so that Jack the account holder is still able to sell/trade their shares.

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

#932

Post by edaemon »

sokoloff wrote: post #13
bradleyjg wrote: post #3

If they were just blocking margin trading or trades with unlimited risk that would be one thing. But this smacks of either paternalism or trying to manipulate the market. I hope they lose a lot of customers (or product depending on your POV).

It's absolutely paternalism, IMO. I'm less sure whether I think it's a good thing or not (because I think people buying new positions in GME at this point are unlikely to end up happy about that in mid-Feb.) I'm all for "let 'em play" in general but this is not going to end well for a lot of folks...

I'm not sure an app that allows you to put your entire account balance into options trades is engaging in good-faith paternalism by preventing people from buying a particular stock.

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

#933

Post by wonderwonder »

If Robin Hood was allowing people to sell but not to buy, and most other Citadel involved brokerages were doing the same, who was able to purchase the massive volume of shares being sold? If it turns out that it was only allowing large hedge funds with massive short exposure then it means that they were artificially reducing price to bail them out and the very real expense of the retail investors that were suddenly and inexplicably bag holders on a stock that could not be longed.

If this is true, then this is a Bernie Madoff level crime and I hope that those responsible get similar sentences. Tens / Hundreds of thousands of retail investors were involved in the WSB long, all of these people potentially suffered damages, some of them significant. Its fine to say only invest what you can lose but in your risk analysis I am sure that the market maker intentionally committing fraud to force you to dump your shares probably did not factor in.

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

#934

Post by alasdair_ »

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)?

Because Robinhood's actual customer is Citadel, not the retail people making the trades.

Citadel gave $2.7BN to Melvin Capital a couple of days ago. It stands to lose that money if Melvin (and Citron etc.) can't fully cover their short positions.

A good way to make the stock price go down and allow Citadel to make money, is for RH to only allow selling and not buying of GME.

It's utterly appalling market manipulation.

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

#935

Post by andi999 »

Does anybody know: who is getting rich on this? What I mean, the short seller have to pay up a lot of money because of the squeeze, so who gets this money. Of course the entities who lend the stocks to them. Who is it specifically Goldman? (the guys from reddit just 'create' the squeeze, they are not getting a big chunk from the cake).

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

#936

Post by heimatau »

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…

Rumor mill says that the White House and Sequoia called RH to force their hand. Honestly, I wouldn't expect anything less. I say this because 2% drawdown of the stock market didn't happen for zero reason. It happened because these fools are leveraged up to their ass (metaphor) and the bet cost them severely. And it's cheaper to take the bad PR while salvaging your fuck up. These people act in a different set of rules and that's not okay.

IMHO, I'm concerned about this because this is a 1st amendment problem. Let grown adults gamble. Let them be responsible for their dumb actions (hedge and retail alike). If someone is 'too big to fail' then they are 'too big to exist'.

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

#937

Post by 6nf »

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…

> Melvin doesn't have a short position anymore.

Untrue, the number of shares short is still 70 million. Nothing changed.

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

#939

Post by lukeramsden »

sltkr wrote: post #330
rswail wrote: post #159

As I understand it, the hedge funds had naked shorts. That's illegal. If they did, what is happening to them serves them right. Even if they didn't, a "short squeeze" is perfectly legal. 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. This is not a "pump a…

> 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…

Part of the reason it was trading so low was supposedly because the short sellers were suppressing the price, simply by way of being very publicly short the stock. It was clearly undervalued because of this, which is why people like /u/DFV (the guy who turned $53k in to 10's of millions) bought in about 18 months ago.

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

#940

Post by Sohcahtoa82 »

alistproducer2 wrote: post #122
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…

Reddit and discord are afraid they'll be implicated in what is a classic pump and dump. Robinhood only exists because the SEC has chosen to look the other way concerning the pattern day trading rule which clearly is in jeopardy if big money starts complaining.

> Robinhood only exists because the SEC has chosen to look the other way concerning the pattern day trading rule

This is simply not true at all.

I've had my trading on RH restricted specifically because of the PDT rule. As in, I was about to make a trade, and the site told me that the trade would cause a restriction because of pattern day trading.

Post reply on HN