Robinhood Raises Another $2.4B from shareholders • Hacker News Board

Re: Robinhood Raises Another $2.4B from shareholders

#51

Post by ZephyrBlu » Mon, Feb 01, 2021, 5:53 PM UTC

Armisael16 wrote: post #36

Accujack wrote: post #27

Earlier quoted context omitted.

Yes. If you read what the ultimate intent of the /r/wallstreetbets crowd is, they're not just trying to exercise the same right to make money off of the financial system that billionaires have. A year ago, the person that started this detected a situation where GME was a company that didn't have long term prospects, wasn't losing money, but was still shorted to 140% of it's value. It's not supposed to be possible to…

>It's not supposed to be possible to go over 100% any more since 2008, by the way. This is fundamentally untrue. Abusive naked shorting with the goal of driving down prices is illegal. >100% short interest doesn’t require naked shorting at all. 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.

To clarify, this is not considered a naked short because in this situation there is a share that is known to exist.

Re-borrowing the same share does not make it a naked short.

Re: Robinhood Raises Another $2.4B from shareholders

#52

Post by SkyPuncher » Mon, Feb 01, 2021, 5:53 PM UTC

SpicyLemonZest wrote: post #43

Accujack wrote: post #27

Earlier quoted context omitted.

Yes. If you read what the ultimate intent of the /r/wallstreetbets crowd is, they're not just trying to exercise the same right to make money off of the financial system that billionaires have. A year ago, the person that started this detected a situation where GME was a company that didn't have long term prospects, wasn't losing money, but was still shorted to 140% of it's value. It's not supposed to be possible to…

I think you need to seriously consider the possibility that the people spreading this narrative are doing so dishonestly in order to pump the stock. Short interest is now far below 100% ( https://www.bloomberg.com/news/articles/2021-02-01/gamestop-... ), yet /r/wallstreetbets is still full of hold memes rather than victory speeches.

> Short interest is now far below 100%

With all due respect, this is still speculative. We won't know the exact numbers for another week.

Re: Robinhood Raises Another $2.4B from shareholders

#53

Post by alex_young » Mon, Feb 01, 2021, 5:54 PM UTC

Armisael16 wrote: post #36

Accujack wrote: post #27

Earlier quoted context omitted.

Yes. If you read what the ultimate intent of the /r/wallstreetbets crowd is, they're not just trying to exercise the same right to make money off of the financial system that billionaires have. A year ago, the person that started this detected a situation where GME was a company that didn't have long term prospects, wasn't losing money, but was still shorted to 140% of it's value. It's not supposed to be possible to…

>It's not supposed to be possible to go over 100% any more since 2008, by the way. This is fundamentally untrue. Abusive naked shorting with the goal of driving down prices is illegal. >100% short interest doesn’t require naked shorting at all. 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.

> 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?

Re: Robinhood Raises Another $2.4B from shareholders

#54

Post by jessaustin » Mon, Feb 01, 2021, 5:55 PM UTC

Armisael16 wrote: post #36

Accujack wrote: post #27

Earlier quoted context omitted.

Yes. If you read what the ultimate intent of the /r/wallstreetbets crowd is, they're not just trying to exercise the same right to make money off of the financial system that billionaires have. A year ago, the person that started this detected a situation where GME was a company that didn't have long term prospects, wasn't losing money, but was still shorted to 140% of it's value. It's not supposed to be possible to…

>It's not supposed to be possible to go over 100% any more since 2008, by the way. This is fundamentally untrue. Abusive naked shorting with the goal of driving down prices is illegal. >100% short interest doesn’t require naked shorting at all. 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.

In this situation, there's no theoretical upper limit, is there? How is this any better than it was before the naked short selling "ban" was instituted?

Re: Robinhood Raises Another $2.4B from shareholders

#55

Post by ping_pong » Mon, Feb 01, 2021, 5:55 PM UTC

I find it very hard to believe hundreds of thousands of new accounts were created since Thursday. Everyone I know trading on RH is now actively in the process of transferring out, once they close up their short term trades like GME.

Re: Robinhood Raises Another $2.4B from shareholders

#56

Post by ZephyrBlu » Mon, Feb 01, 2021, 5:55 PM UTC

Accujack wrote: post #47

djbebs wrote: post #32

Earlier quoted context omitted.

Thats not true at all. Its perfectly possible and legal to short beyond 100%

The practice I'm referring to is "naked shorting" which has been illegal since 2008 in the US.

See this comment for why you can have >100% short interest without naked shorting: https://news.ycombinator.com/item?id=25991013

Re: Robinhood Raises Another $2.4B from shareholders

#57

Post by kcg » Mon, Feb 01, 2021, 5:57 PM UTC

Accujack wrote: post #47

djbebs wrote: post #32

Earlier quoted context omitted.

Thats not true at all. Its perfectly possible and legal to short beyond 100%

The practice I'm referring to is "naked shorting" which has been illegal since 2008 in the US.

Except you're completely conflating terms and numbers here. A stock can have over 100% short interest with no naked shorting occurring. >100% short interest DOES NOT imply that there is naked shorting.

Re: Robinhood Raises Another $2.4B from shareholders

#58

Post by ZephyrBlu » Mon, Feb 01, 2021, 5:57 PM UTC

dpiers wrote: post #49

Armisael16 wrote: post #36

Earlier quoted context omitted.

>It's not supposed to be possible to go over 100% any more since 2008, by the way. This is fundamentally untrue. Abusive naked shorting with the goal of driving down prices is illegal. >100% short interest doesn’t require naked shorting at all. 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.

Call it a scantily-clad short then. A share that is already lent out to a short seller should not be eligible to be lent out again for the same reason I can't get two mortgages to buy the same house - the underlying collateral would be owed to multiple parties.

This is ok because all instances of borrowing the share don't need to be settled simultaneously.

Re: Robinhood Raises Another $2.4B from shareholders

#59

Post by ZephyrBlu » Mon, Feb 01, 2021, 5:59 PM UTC

ping_pong wrote: post #55

I find it very hard to believe hundreds of thousands of new accounts were created since Thursday. Everyone I know trading on RH is now actively in the process of transferring out, once they close up their short term trades like GME.

A lot of total noobs have showed up on /r/wallstreetbets, I'm not at all surprised that there have been so many new accounts opened.

People who've never been in the market before in their life seem to have jumped on $GME.

Re: Robinhood Raises Another $2.4B from shareholders

#60

Post by my_usernam3 » Mon, Feb 01, 2021, 6:00 PM UTC

omosubi wrote: post #33

maxerickson wrote: post #23

Earlier quoted context omitted.

Who knows how aware they were of it, but this didn't happen just this week or just because of a meme. They built the business to operate in a certain way and then let it grow without ensuring they had the capital reserves to sustain those operations.

The founders certainly deserve criticism, but plenty of other brokers are doing the same thing, no? is this not a black swan event?

Founders AND who ever does their communication. Their email about the volatility of stocks was so belittling. Even had a hyper link of "economics 101".

From what I understand now, them having to halt buys on $GME wasn't really their call. However, given the tone of their emails, I can only blame them for the theories that they did it on behalf of HF.