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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

#391

Post by snickms »

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…

Would it make sense for these companies to make bets against their customer's trades?

My guess it that the customers are wrong most of the time.

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

#392

Post by bobsmooth »

nrmitchi wrote: post #387
aphextron wrote: post #370

Earlier quoted context omitted.

Robinhood is a joke. Not just because of these shenanigans, but because their lack of technical stability and customer service is unacceptable. They reliably crash on every major trading day. And there's no US based support. Never ever use a broker where you can't pick up the phone and talk to a real human being. They all have zero commissions now so there's no excuse.

They're also a joke because they are, as far as I'm concerned, not a "brokerage". They are an app designed to convince people that they understand how to trade stocks, in order to sell them stocks. A real brokerage should, in my opinion, and some sort of duty to act in the best interest of its clients. A brokerage should not have huge backlash because its users got margin called, and those users didn't even know what…

Getting margin called is one thing. Being prevented from buying a stock is something completely different.

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

#393

Post by sidibe »

beagle3 wrote: post #161
sidibe wrote: post #76

Earlier quoted context omitted.

The people who probably would have lost their money anyways (because they were waiting for more suckers to push the price higher) now have an excuse (other retail buyers couldn't open new positions). People who realized those were the suckers stomached selling while it wasn't as high as yesterday but still astronomical. The anger at Robinhood reminds me of when the government in Nigeria cracked down on MMM ponzi sche…

Except, as SI/Float was at 139%, there was a guaranteed sucker to buy it off them at basically any price - unlike in a Ponzi scheme where you never know if there’s going to be another sucker.

Well the original shorts claim to have already closed their position and as it went up I think people are probably jumping on that side of the bet as well. Short interest doesn't mean it's going to go up forever this thing is just moving up on ponzi energy not short math

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

#394

Post by krupan »

015a wrote: post #386
posix_compliant wrote: post #372

Earlier quoted context omitted.

So you’re saying the issue is “what if the grocery goes insolvent before it can hand you the milk, but after you’ve paid”? I’m still not understanding how robinhood lost money in the first place.

That's an accurate enough analogy. When you sell a stock on Robinhood, it takes ~2 days to "clear" the transaction. So, Robinhood credits your account, but Robinhood doesn't see that money for 2 days. They don't allow you to withdraw the money from Robinhood until its cleared, but you can purchase other stocks with the money, and if you do that, Robinhood now needs to send something to the seller. All brokerages, and…

“But, the deeper issue is the US financial system and its molasses speed of moving money around.”

Sorry, I’m going to be That Guy here and point out that when people accuse Bitcoin of having slow transactions, this is what they should be comparing against, not Visa card transactions. Actual settled transactions. Bitcoin takes 10 minutes. US financial system takes days.

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

#395

Post by thorwasdfasdf »

aphextron wrote: post #370
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…

Robinhood is a joke. Not just because of these shenanigans, but because their lack of technical stability and customer service is unacceptable. They reliably crash on every major trading day. And there's no US based support. Never ever use a broker where you can't pick up the phone and talk to a real human being. They all have zero commissions now so there's no excuse.

Sure, app crashes undermine confidence in Robinhood.

But, if you're a buy and hold investor, it shouldn't be an issue.

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

#396

Post by shadowgovt »

neximo64 wrote: post #124
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.

Your bank actually has to lie to you to remain solvent. All banks do. The Central Bank also encourage it. Last year you saw both that banks were 'forced' to withhold dividends and they were perfectly capitalised. Both cant be true of course. If they hide it from you your money and everyones money is safe. If they tell the truth everyone loses, so it is actually the best outcome for you and everyone else. The fraction…

Lying in what sense?

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

#397

Post by boatsie »

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.

If it's all truthful, I don't understand why he doesn't just speak concretely. Eg, "For every $300 share of GME, based on the volatility, we were required to deposit $50/share as collateral. We expected 1,000,000 shares to be bought and don't have $50m we can post." Also, if true, shouldn't other brokerages would be able to confirm/deny this as they would be subject to the same depository requirements?

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

#398

Post by hnrodey »

015a wrote: post #386
posix_compliant wrote: post #372

Earlier quoted context omitted.

So you’re saying the issue is “what if the grocery goes insolvent before it can hand you the milk, but after you’ve paid”? I’m still not understanding how robinhood lost money in the first place.

That's an accurate enough analogy. When you sell a stock on Robinhood, it takes ~2 days to "clear" the transaction. So, Robinhood credits your account, but Robinhood doesn't see that money for 2 days. They don't allow you to withdraw the money from Robinhood until its cleared, but you can purchase other stocks with the money, and if you do that, Robinhood now needs to send something to the seller. All brokerages, and…

Just my two cents.

I created a Robinhood account on Wednesday evening and transferred $1000 via Plaid. My account is still not active and AFAIK that $1000 is in limbo.

The app tells me "We're reviewing your application and your deposit is pending. Application approval may be delayed. We'll notify you when you can begin trading."

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

#400

Post by kryogen1c »

TeMPOraL wrote: post #326
kryogen1c wrote: post #254

Earlier quoted context omitted.

> 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 relatio…

> They screwed it up big time.

because people are mad at them? you think they shouldve gone public during a high-volume, high-volatility feeding frenzy with tens of billions flying around and said "we're insolvent, but its ok we're taking action to recover our position"?

it looks to me like their actions were totally rational and at least a good-case scenario, if not best-case. platforms have been deleted in the past due to circumstances like these, and i think the CEO going on TV and saying theyre on the verge of massive legal and financial problems is suicide. keeping their business alive is supporting their customers. no if, ands, or buts.

calling this a PR problem is a bit obnoxious. its like saying theres no technical problem, but people think there is, so the company has to not only continue providing their free services but also make their users feel good while doing so. RH had to navigate dangerous waters, with bankruptcy to the left, bankruptcy AND lawsuits on the right, and only lawsuits ahead. im not sure how they couldve done better.

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