Dear Hollywood, Please make a movie out of this.
The Squeezed Short Edit: If you haven't watched "The Big Short" yet, watch it! Tonight!
My vote goes to "The Big Squeeze" ... although, it kind of sounds like an adult entertainment movie.
Robinhood, in Need of Cash, Raises $1B from Its Investors
51–60 of 479 posts
Re: Robinhood, in Need of Cash, Raises $1B from Its Investors
#52So 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…
So you’re putting a theory about pedophiles that run the world so they can drink the blood of children is somehow on par with the theory that billionaire hedge funds would try to exert undue pressure to preserve their wealth...
Get the fuck out of here with your false equivocation
Re: Robinhood, in Need of Cash, Raises $1B from Its Investors
#53Earlier quoted context omitted.
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.
As I understand it, even for executing regular buys, the settlement houses require RH to maintain a large deposit of dollars as collateral.
This collateral requirement goes up when a stock becomes heavily traded, or more volatile.
Because of the insane volume & volatility of GME, RH's cushion of collateral was exhausted (And they've now replenished it, by borrowing & raising money.)
The reason that sells were permitted to execute was because each sell by one of their users reduces the collateral requirements in their settlement accounts. (So the settlement houses allowed sell orders to go through.)
The tl;dr is - when you are trading through a discount broker, you get a discount service. Serious brokerages, that are used by institutional investors don't have these problems, but they also charge a lot more for their services.
Re: Robinhood, in Need of Cash, Raises $1B from Its Investors
#54The 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.
And right after saying they don't have any liquidity problems said, "We're #1 on the app" while retail investors were losing millions because of expiring options/stocks. Absolutely tone-deaf. Not denying that all securities have risks, but that was a bad response imo.
Retail investors lost millions because of an inability to buy?
Re: Robinhood, in Need of Cash, Raises $1B from Its Investors
#55Is it just me, or did that article end... weird? Like, scrolling more, expecting it to continue. I'm sure we've been conditioned to such articles having a typical arc, that this one... didn't?
Re: Robinhood, in Need of Cash, Raises $1B from Its Investors
#56Re: Robinhood, in Need of Cash, Raises $1B from Its Investors
#57Robinhood has been known to be sham for a very long time. Anyone with money there is willfully ignorant.
It’s not a scam it’s just a pretty mediocre broker with a fancy ui. Lest we forget they introduced many traders to options, for better and worse. They are/were WSBs broker of choice. They changed the fee landscape in trading US-wide. It’s hard to say they weren’t impactful, though we can disagree on the positivity of the impact itself.
Can you point to any above average, or dare to say, good brokers?
Re: Robinhood, in Need of Cash, Raises $1B from Its Investors
#58"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’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.
Do users actually lose the stocks, if something that happens to the Robinhood itself? I live under assumption that it is not happening. In any case stocks should stay belonging to the folks who purchased them.
Re: Robinhood, in Need of Cash, Raises $1B from Its Investors
#59Not sure I understand: High volume causes sudden operating expenses up to a billion? Like, they're launching more EC2 instances? Or is that because they suffer from slippage? And if so, why don't they adjust the spreads? And if it's slippage, why would they still allow selling but not buying? Color me skeptic, but this makes no sense. For now I believe they just come up with some story to mask their obvious, IMO crim…
As I understand it, stock trades take days to settle and the brokerage is on the hook if the customer doesn't pay for some reason. When the market is so volatile, Robinhood's trading partners demand more collateral.
Re: Robinhood, in Need of Cash, Raises $1B from Its Investors
#60Earlier quoted context omitted.
> 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.
yeah they lied about revenue sources and why they were able to offer low prices. would have been better if they just shut up and didn't try that hook.