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Robinhood Raises Another $2.4B from shareholders

wsj.com

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Re: Robinhood Raises Another $2.4B from shareholders

#81

Post by belltaco »

jessaustin wrote: post #54
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.

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?

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

Re: Robinhood Raises Another $2.4B from shareholders

#82

Post by mdoms »

crazygringo wrote: post #41
mdoms wrote: post #25

Earlier quoted context omitted.

With a $3.4b warchest this entirely undermines their (plainly untrue) narrative about restricting the stock due to capital requirements.

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.

Re: Robinhood Raises Another $2.4B from shareholders

#84

Post by mam2 »

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.

This essentially the same result.. you are making two shorts with one share so one is "naked"....

Re: Robinhood Raises Another $2.4B from shareholders

#85

Post by omosubi »

my_usernam3 wrote: post #60
omosubi wrote: post #33

Earlier quoted context omitted.

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.

yeah I agree completely on the communication front.

it just surprises me that the HN crowd preaches the gospel of growth at any cost and then when it blows up in robinhood's face everyone runs here to say that they should have known. seems like a lot of after-the-fact rationalization to me.

Re: Robinhood Raises Another $2.4B from shareholders

#86

Post by jessaustin »

belltaco wrote: post #81
jessaustin wrote: post #54

Earlier quoted context omitted.

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?

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.

Re: Robinhood Raises Another $2.4B from shareholders

#87

Post by ping_pong »

ZephyrBlu wrote: post #59
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.

But Thursday is when they stopped trading GME. I can't believe that people would be stupid enough to go into RH to trade when the entire WSB is talking about how RH screwed them.

Re: Robinhood Raises Another $2.4B from shareholders

#88

Post by vincentmarle »

crazygringo wrote: post #45
vincentmarle wrote: post #20

We are starting to see the limits these apps have, they are just not cut out to be considered a professional broker. It's funny they worry so much about (short-term) liquidity, while their long-term brand & trust & customer base erodes irrecoverably by the minute.

Huh? They're worrying about short-term liquidity in order to provide serve in order to maintain their brand, trust, and customer base. That's... the entire source of the problem. Meeting capital requirements in order to keep running.

If you have a CEO that keeps publicly lying and downplaying their actual issues, then yes, you do erode the trust.

Re: Robinhood Raises Another $2.4B from shareholders

#90

Post by SEJeff »

jessaustin wrote: post #46
SEJeff wrote: post #14

Earlier quoted context omitted.

> It puzzles me how people still think Robinhood can remain competitive knowing they sell user's order flow to hedge funds Many brokers do this. They get better execution services from hedge funds / electronic traders than they could possibly build themselves. Given rules like NBBO for equities, this can really matter. It saves them money in engineering a hard problem AND makes them money from the other side.

You cut off the end of the proposition: "...and restricted free market movement of capital in the markets." It is relatively common for brokers to sell order flow. It is not unheard of for brokers to stop trading in a security for limited periods. It is very strange for brokers to enforce one-way trading in a security as Robbinhood did, and highly suspicious on top of that when the resulting asymmetric trading regime…

That part I entirely agree with you on. I just wanted to point out that the practice of selling flow to companies who do really good execution is commonplace and sort of expected. I’d bet 10,000 robinhood could never build trade execution as good as citadel or any number of electronic trading firms.

But to your latter point, it seems almost criminal. At the least, I hope the class action against robinhood is won by the clients.

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