Robinhood, in Need of Cash, Raises $1B from Its Investors • Hacker News Board

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

#21

Post by sgpl » Fri, Jan 29, 2021, 7:06 AM UTC

tempsy wrote: post #13

The CEO just gave 3 interviews tonight and denied this was at all related to liquidity issues for the company in all 3 when pressed. Terrible look.

A clip from one of those interviews:

https://twitter.com/ChrisCuomo/status/1354994000294522881

In the entire interview there's no real answer to any question.

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

#22

Post by exclusiv » Fri, Jan 29, 2021, 7:07 AM UTC

vkou wrote: post #9

jzoch wrote: post #8

Earlier quoted context omitted.

and at the same time their own CEO made statements that they dont have liquidity issues. They also sent that communication well after the market closed. They should have sent a much more detailed explanation right at market open thursday

It can be argued that they don't have liquidity issues - they have collateral deposit issues (Due to the massive user growth, and the delay between when an ACH transfer to Robin Hood clears the banking system (a few days), and the time they permit you to trade on your account (less than a few days))

They blocked regular buys though. If you have money in your RH account, this is a big problem.

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

#23

Post by throwawaysea » Fri, Jan 29, 2021, 7:07 AM UTC

So much for the conspiracy theory about Robinhood changing policies to favor institutional traders over retail investors. Speculation is healthy but I am surprised to see so many educated people fall for social media fear mongering to the point that they decided to drive down Robinhood’s app reviews. Many of my friends who ate up all the outrage are the same people who laughed at QAnon conspiracy theorists, but here they are drinking the same koolaid.

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

#24

Post by ajsharp » Fri, Jan 29, 2021, 7:09 AM UTC

"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 their credit line.

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.

This could turn into a run on the brokerage pretty quickly, and probably already has in some measure, especially after a day of massively lost customer trust. He certainly didn't help it by going on TV and lying about their liquidity issues. They probably would've been better off by issuing a statement and keeping him off TV.

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

#25

Post by Clewza313 » Fri, Jan 29, 2021, 7:13 AM UTC

n_io wrote: post #14

tempsy wrote: post #13

The CEO just gave 3 interviews tonight and denied this was at all related to liquidity issues for the company in all 3 when pressed. Terrible look.

I’d imagine liquidity issues are the least of their concerns right now. At least, they would be to me.

Why? For a brokerage it's an existential concern. And they can't publicly admit it's a problem either, because that would likely trigger the brokerage equivalent of a bank run. (Of course, odds are they're already grappling with that as well.)

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

#26

Post by MattGaiser » Fri, Jan 29, 2021, 7:14 AM UTC

throwawaysea wrote: post #23

So much for the conspiracy theory about Robinhood changing policies to favor institutional traders over retail investors. Speculation is healthy but I am surprised to see so many educated people fall for social media fear mongering to the point that they decided to drive down Robinhood’s app reviews. Many of my friends who ate up all the outrage are the same people who laughed at QAnon conspiracy theorists, but here…

Whenever we dislike or mistrust someone, people tend to overattribute that someone's failings or inconvenient actions to malice.

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

#27

Post by ThePadawan » Fri, Jan 29, 2021, 7:15 AM UTC

sgpl wrote: post #21

tempsy wrote: post #13

The CEO just gave 3 interviews tonight and denied this was at all related to liquidity issues for the company in all 3 when pressed. Terrible look.

A clip from one of those interviews: https://twitter.com/ChrisCuomo/status/1354994000294522881 In the entire interview there's no real answer to any question.

> In the entire interview there's no real answer to any question.

You know, I've been on many job interviews this past year, and when that happens, I immediately know not to go further with that person (and if it persists, the company).

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

#28

Post by barbecue_sauce » Fri, Jan 29, 2021, 7:15 AM UTC

throwawaysea wrote: post #23

So much for the conspiracy theory about Robinhood changing policies to favor institutional traders over retail investors. Speculation is healthy but I am surprised to see so many educated people fall for social media fear mongering to the point that they decided to drive down Robinhood’s app reviews. Many of my friends who ate up all the outrage are the same people who laughed at QAnon conspiracy theorists, but here…

This is nowhere near the same koolaid.

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

#29

Post by julienreszka » Fri, Jan 29, 2021, 7:15 AM UTC

throwawaysea wrote: post #23

So much for the conspiracy theory about Robinhood changing policies to favor institutional traders over retail investors. Speculation is healthy but I am surprised to see so many educated people fall for social media fear mongering to the point that they decided to drive down Robinhood’s app reviews. Many of my friends who ate up all the outrage are the same people who laughed at QAnon conspiracy theorists, but here…

>Speculation is healthy

I've never seen somebody say speculation is healthy but rather the opposite. Care to elaborate?

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

#30

Post by ivalm » Fri, Jan 29, 2021, 7:17 AM UTC

vmception wrote: post #19

Triv888 wrote: post #10

Earlier quoted context omitted.

yes... https://www.sec.gov/news/press-release/2020-321

> Without admitting or denying the SEC’s findings, Robinhood agreed to a cease-and-desist order prohibiting it from violating the antifraud provisions of the Securities Act of 1933 and the recordkeeping provisions of the Securities Exchange Act of 1934, censuring it, and requiring it to pay a $65 million civil penalty. A) SEC should remove the option of "without admitting or denying" this time B) The CEO is choosing…

I mean the fraud here is fairly eh. They gave a smaller price improvement (but still beat nbbo) relative to other discount brokerages. The lie was that they delivered same great price as other discount brokerages. However, most of their clients were small and still net-saved money by not paying the flat fee. The practice ended in 2018.