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Robinhood Raises Another $2.4B from shareholders

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Re: Robinhood Raises Another $2.4B from shareholders

#101

Post by blaser-waffle »

Jtsummers wrote: post #4
dannyphantom wrote: post #2

I'm curious if this is to address the current potential of a large shift of users moving to different brokerages and to keep Robinhood afloat until IPO in which it will have to fend for itself. I've seen a large sentiment online, and in public spaces expressing how angry the consumer is about RH restricting trading.

People still use Bank of America and Wells Fargo despite the incredibly customer-hostile things they've done in the past. I will not be surprised if Robinhood weathers this pretty well after a short term hit.

Everybody needs to bank, those pay checks gotta go somewhere.

The portion of people who invest -- outside of forced investing through 401k, etc. -- is pretty small in comparison.

Those that are using an investment application to speculate on stocks on their phone are a smaller yet demographic. And I'll bet that, dollars to donuts, they're more informed about everything, and more willing to shop.

Re: Robinhood Raises Another $2.4B from shareholders

#102

Post by swampthing »

mdoms wrote: post #82
crazygringo wrote: post #41

Earlier quoted context omitted.

Um, no. The "war chest" is in order to meet the capital requirements. It says so right in the article. I mean, you think the owners are diluting their ownership just for fun? Nobody does that. Also why do you think the capital requirements are untrue? There have been plenty of factual articles describing the precise increase that was required and how it was spread across different trading platforms. It's not speculat…

If they have the capital why aren't the opening up trading on GME fully? I'm not saying the capital requirements aren't real, I'm saying that's not the complete and honest explanation for why they're restricting trading on GME. Anyone with two brain cells to rub together can see their conflict of interest here.

Having capital is not binary. It's not like once you meet a magic threshold, you can then allow for unlimited trades. Robinhood raised $1B on Thursday, then another $2.5B or whatever today. By your logic, they had the capital on Thursday, so why would they need to raise more today?

Re: Robinhood Raises Another $2.4B from shareholders

#103

Post by coffeeboy27 »

jerry80 wrote: post #29
blantonl wrote: post #10

Earlier quoted context omitted.

That's correct. Additionally, Robinhood isn't the only one in a bind right now. TD Ameritrade has restricted a lot of options trading on a lot of these stocks, requiring you to call in to sell certain types of derivatives plays which have a level of risk but highly profitable for experienced traders. It's left a VERY sour taste in my mouth to know I have to call into a call center, and wait 90 minutes to speak to som…

FYI, eTrade is still allowing these trades. I sold a put on AMC just now.

You can buy on eTrade, Fidelity, Vanguard, Schwab, WeBull, and others. As of 4pm EST RH has allowed for each user to have 20 shares of GME, an increase from 1 share which was the max at the opening bell.

Re: Robinhood Raises Another $2.4B from shareholders

#104

Post by Accujack »

kcg wrote: post #75
Accujack wrote: post #67

Earlier quoted context omitted.

Also the possibility that people spreading the narrative that people are dishonestly spreading narratives to pump the stock. My summary above is rough, and it's based on most of the information I've read about the situation. As always, there are voices on both sides for every single fact. Time will tell how this all falls out, but right now there are a lot of finance firms grinding their teeth, which is a victory in…

> Also, apparently Gamestop itself used the gain in stock price to settle some debts by being able to issue more stock to meet demand at the higher price, thus getting a cash infusion. False -- if you're going to spread information about financial nuances across this thread, you should look it up first. Go read the SEC filings for GME (SEC EDGAR is your friend), there has been no additional issuance since GME took of…

Correct, my old memory conflated GME with AMC, who did issue stock to retire debt.

Re: Robinhood Raises Another $2.4B from shareholders

#105

Post by SilasX »

scruple wrote: post #74
blantonl wrote: post #10

Earlier quoted context omitted.

That's correct. Additionally, Robinhood isn't the only one in a bind right now. TD Ameritrade has restricted a lot of options trading on a lot of these stocks, requiring you to call in to sell certain types of derivatives plays which have a level of risk but highly profitable for experienced traders. It's left a VERY sour taste in my mouth to know I have to call into a call center, and wait 90 minutes to speak to som…

My wife has been on hold with IBKR for the last 2 hours trying to get through to get orders placed.

It's affecting people even for unrelated transactions. For a wire unrelated to stock investing, I was on hold with Schwab a total of 1 hour over since yesterday, although part of that was from giving up twice.

Re: Robinhood Raises Another $2.4B from shareholders

#106

Post by alex_young »

kcg wrote: post #63
alex_young wrote: post #53

Earlier quoted context omitted.

> If person A borrows a stock from person B then sells it to person C, they can borrow the stock back from person C and sell it again. No naked short involved. Naive question: Why would that ever happen? Wouldn't this scenario just cost person C commissions with no opportunity for gain?

In this scenario, Person C still owns the stock and will gain/lose with the stock's rise/fall. Person A borrowing from C at the end is just borrowing, not buying. At some point Person A needs to return stock to Person C.

So in this example person A could keep selling the same share over and over again? How would the multiple “owners” realize their gains if they all decided to sell on the same day?

Re: Robinhood Raises Another $2.4B from shareholders

#107

Post by kcg »

alex_young wrote: post #106
kcg wrote: post #63

Earlier quoted context omitted.

In this scenario, Person C still owns the stock and will gain/lose with the stock's rise/fall. Person A borrowing from C at the end is just borrowing, not buying. At some point Person A needs to return stock to Person C.

So in this example person A could keep selling the same share over and over again? How would the multiple “owners” realize their gains if they all decided to sell on the same day?

Person A can only sell the number of shares they've borrowed. If Person A borrows a share from Person C, they can sell that one share only. To sell more without borrowing additional shares would be naked shorting, which is prohibited.

You might be asking instead about the following scenario, though, where a single share is borrowed and sold short multiple times:

Person A borrows from Person C and sells to Person B

Person D borrows from Person B and sells it to Person E

Well, the covering of the shorts doesn't have to happen in an atomic transaction; there are thousands to millions of trades of a single ticker every day. Just as a single share can create a chain of multiple shorts (borrows and sales), a single share can cover multiple shorts too through a chain of trades.

Re: Robinhood Raises Another $2.4B from shareholders

#108

Post by Armisael16 »

jessaustin wrote: post #86
belltaco wrote: post #81

Earlier quoted context omitted.

Because its the difference between selling that you borrowed and whats in your possession vs. something thats not.

That might make a moral difference, but I'm more concerned about the effect of the financial system on firms in the economy. It doesn't seem obvious that "naked" short-selling has a worse effect than "recursive" short-selling.

Naked shorts let you create stock out of nothing, which you can sell to drive prices down (and ultimately make money off of, since you can rebuy more cheaply).

If you can’t do that then you at least have to get the cooperation of someone who does own the stock in sufficient quantities - and their interests are probably against yours since they, y’know, own the stock.

Banning recursive shorting would be a nightmarish enterprise, since each individual share would need to be tracked to see if it was already shorted. Banning naked shorts supposedly does enough to discourage the behavior. We may be seeing that to not be the case.

Re: Robinhood Raises Another $2.4B from shareholders

#109

Post by rokobobo »

swampthing wrote: post #80
maxerickson wrote: post #78

Earlier quoted context omitted.

Getting the underlying assumptions wrong or at least completely out of step with day to day operations is what I am getting at. It didn't happen overnight that they had extended customers more margin than they were able to secure.

As I understand it, the deposit requirements imposed on Robinhood were not because of the margin accounts.

That's correct. The DTCC requires brokers to post collateral until settlement of the trades, and even fully funded customer accounts accounts with On top of that, my opinion of the DTCC (I worked at a self-clearing firm for a while, so we had to interact with them) is that they are intentionally dumb and conservative when it comes to asking for collateral. And until now, this hasn't really drawn much attention, mostly because the rest of the firms out there are a lot better capitalized than RH. My guess for why they're better capitalized is just that they're larger (in AUM), older, and operate in more markets.

I don't like RH, but I wouldn't blame them for getting blindsided by the DTCC to the amount that they did. Props to them for being able to raise the cash, I hope it wasn't all equity, since they won't need that cash in a couple of months. I saw recently that they had $12B in AUM--it doesn't make sense to run with $3B in operating capital.

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