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Robinhood, in Need of Cash, Raises $1B from Its Investors

nytimes.com

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Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#321

Post by economusty »

ajsharp wrote: post #24

"To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation." Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of the…

I already started liquidating and transferring out, this situation has me angry enough to lose the long term cap gain tax break. That's right I'm paying more taxes to avoid dealing with robinhood.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#322

Post by ImprovedSilence »

nojito wrote: post #305
michaelt wrote: post #266

Earlier quoted context omitted.

> Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of their credit line. Perhaps you can help me understand something. In the absence of margin trading, if I deposit $100 of cash at my brokerage, then I order my broker to buy $100 worth of Stock A, how does credit and the possibility of bankruptcy enter into the transaction at…

Trades aren't immediate they take T+2 to clear. During that time frame, Robinhood has to put up collateral.

This is the right answer. And with the amount of volitility GME was seeing, and the amount of trades of it, created lots of money for the user, but RH was still days away from the transactions actually settling, thus they didnt have the cash from the sale yet.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#323

Post by zoobab »

ajsharp wrote: post #24

"To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation." Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of the…

"I watched the CEO on CNN tonight, and while I found him pretty difficult to watch, this is a very difficult position to be in. If you admit on TV that your company is experiencing liquidity issues -- even if temporary in nature such as with clearing custodianship requirements -- you run the risk of triggering a greater panic through customer withdrawals/redemptions."

A Bankrun!

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#324

Post by LandR »

itronitron wrote: post #281
michaelt wrote: post #266

Earlier quoted context omitted.

> Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of their credit line. Perhaps you can help me understand something. In the absence of margin trading, if I deposit $100 of cash at my brokerage, then I order my broker to buy $100 worth of Stock A, how does credit and the possibility of bankruptcy enter into the transaction at…

Based on my very limited knowledge, it is my understanding that banks/brokers don't actually consider the deposit to be valid until several days after the transaction. Even if you deposited cash they would probably find some way to delay letting you use the funds pending some 'internal checking'. So in Robinhood's case if there are many people depositing dollars to buy stock then that could be their reason or excuse…

Yeah I forgot about a credit card payment that was due a number of years ago, before I had online banking. I went in 2 days before it was due and paid it cash. I still got a late penalty added brcause cash takes three days to clear.

A bill under £2 and got hit with a fee of £20

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#326

Post by TeMPOraL »

kryogen1c wrote: post #254
prohobo wrote: post #243

Earlier quoted context omitted.

To be honest, it doesn't really matter. This isn't about whether Robinhood technically must or must not do what they're doing, but that the system is setup in such a way that all these claims of "supporting the people" are fundamentally 100% bullshit. Robinhood tanked their credibility by letting the mask slip and people are on that like hyenas because of the irony. Really though, the focus on them is a distraction f…

> these claims of "supporting the people" is fundamentally 100% bullshit. what a world where a free platform takes an action to stay solvent and in business and its a bullshit claim that theyre helping their customers. i guess they shouldve done the more helpful thing and gone bankrupt, illegally allowing trades they cant cover.

It starts with PR. If there was one moment for a company to be brutally honest, it was for Robin Hood yesterday. They didn't get in front of this story, they didn't explain the issue in detail - instead, they blocked the trades, posted a bullshit information-free blogpost, and have their CEO doing rounds on the news smiling and spewing zero-information noise.

This isn't a business model problem, it's customer relationship management problem. They screwed it up big time. Like corporations usually do with their ISO standard PR, but then usually there isn't a critical mass of angry customers looking for blood (some of which are really angry, because they're already operating in the "I'll YOLO what I have on a chance to make Wall Street pay for the pain they inflicted on my parents in 2008" mode).

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#327

Post by slfnflctd »

kryogen1c wrote: post #292
Kaze404 wrote: post #280

Earlier quoted context omitted.

What a world where people are more concerned about a single company going under than the fact that the working class is finally doing something against the rigged capitalist system.

actually im glad you said this. this is the core problem with this WSB/RH/GME event. a certain percentage of people in WSB only want to light a pile of their money on fire for the sole purpose of bankrupting some hedge funds. they expect no returns and only want to cause pain to people with more money than them that they dont like. another percentage of people (i think this group is much, much larger than the first)…

> left holding stock they bought for $100, $200, $300, or $400 a share (WSB was memeing share price was gonna go into the thousands) that is worth Many people said the same thing about TSLA before it stabilized at higher levels. I bought at under $40 and sold around $80 because I thought fundamentals mattered. Turns out they don't right now.

Everyone talking about what GME is 'actually worth' is spouting bullshit. The fact is, no one knows. Because it's up to the market.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#328

Post by anewguy9000 »

onion2k wrote: post #96
peytn wrote: post #37

Earlier quoted context omitted.

I’m not keeping my money with a financial institution that lies to me. End of story. Transfer initiated on my cash, and I’ll deal with moving stocks in the morning.

I’m not keeping my money with a financial institution that lies to me. I know for a fact my bank lies. They've been fined hundreds of millions of dollars for money laundering (it's HSBC). A few years ago I looked in to moving to a more honest bank, but I couldn't find one that also met basic criteria like having access to cash points in the UK and having a half decent mobile banking app. Literally every major bank th…

credit unions?

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#329

Post by tehjoker »

ajsharp wrote: post #24

"To continue operating, it drew on a line of credit from six banks amounting to between $500 million and $600 million to meet higher margin, or lending, requirements from its central clearing facility for stock trades, known as the Depository Trust & Clearing Corporation." Non-zero chance had they not haulted trading on those symbols they would've been insolvent by close of trading today, depending on the size of the…

This dude allowed only selling of GME, not a full freeze. People would be mad but not livid if he hadn't done that, which stinks of corruption.

Re: Robinhood, in Need of Cash, Raises $1B from Its Investors

#330

Post by tuna-piano »

habosa wrote: post #213

Is it just me or is the involvement of VCs here really strange? If Robinhood was anything like a traditional broker (or bank/broker combination) Venture Capital firms would not have been anywhere on the list of places to get emergency money. Although I'm glad that RH has driven the price of trading down for everyone, this is one more reason why most people should keep their money with a more boring financial institut…

My first reaction to any news from a large company that people question the legality of is "I'm sure they have a team of highly qualified lawyers who signed off on this plan."

But then I remembered about the RH checking account that clearly wasn't approved...

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