The whole value prop of Robinhood (from an institutional POV like Citadel) is that providing liquidity to retail traders is valuable because it's lower risk - my guess is that the GME imbroglio blew that assumption out of the water and they got caught with their pants down.
Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
841–850 of 1001 posts
Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
#842Question: Why shouldn't everyone pull their money out of Robinhood asap?
Thesis: Suppose a sufficiently large number of people believe that the market is going to crash one day. Robinhood has just shown us that it will consider locking up everyone's accounts and prevent a sell off while the rest of the market cleanly exits after cutting their losses.
Robinhood investors will be left holding the bag once Robinhood reopens trading for the plebians.
Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
#843im moving to JPMorgan after today events.
Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
#844Goodluck with DOJ and SEC investigating and bringing charges against RobbingHood and Citadel. I am not holding my breath.
Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
#845In retrospect this seems quite obvious.
This Citadel-Melvin-RH triangle looks super sketchy. The sort of thing that might show up in anti-corruption training at a company that does government or especially defense contracting. In fact if I still worked at a particular employer, this would have been the breakroom and lunch topic for today.
Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
#846During today's short ladder immediately after Robinhood removed the ability to buy shares... • There was 443k shares sold in a single batch at $120 at 11:24:36 AM EST. • There was 347k shares sold in a single batch at $140 at 11:19:09 AM EST. Someone took a total loss of $300M from the price an hour prior OR that is a $100M short sale.
Most likely it's a large long position who is capitulating or being margin called (stopped out) by their broker. I don't think a short seller with that kind of capital would ever chase a steep drop like that.
You are probably right!
Justin Kan (YC) just posted this: https://twitter.com/justinkan/status/1354861575916515330?s=2...
Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
#847im moving to JPMorgan after today events.
Ah yes they would never mislead investors to their own benefit and manipulate the market for profit something something subprime crisis.
Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
#84899.99% (or more) of people who buy lotteries, lose ALL their money. However, government allows anyone to buy them. There is no meaningful restriction for an assured destruction of wealth for most of those who buy them. While this GME/AMC run will not end well for many people, restricting people from buying those stocks - whether it is through actions of trading platforms or governing agencies - smacks not just of pat…
Stock market regulation stems largely from the experience of the Great Depression. So even if 99.99% of people lose all their money in lotteries we haven't seen an economic crisis caused by lotteries. We're not likely to see an economic crisis due to a Gamestop short squeeze, but it is a bit of a worrying sign.
And how much did that regulation help prevent the Great Recession and Global Financial Crisis of 2008?
Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
#849Earlier quoted context omitted.
Most likely it's a large long position who is capitulating or being margin called (stopped out) by their broker. I don't think a short seller with that kind of capital would ever chase a steep drop like that.
You are probably right! Justin Kan (YC) just posted this: https://twitter.com/justinkan/status/1354861575916515330?s=2...
RH are scummy but reloading just beforehand seems way too risky by citadel and more like a made-up for attention story.
Re: Robinhood is limiting purchases of stocks: AMC, Blackberry, Nokia, and GameStop
#850Can someone help me understand Robinhood's POV? This just seems so outrageous that there must be some sane rationale that I'm not seeing. Why do Robinhood, Reddit, Discord, etc feel like they have to respond to this? Whether the investments being made are responsible or not, it doesn't seem like it should be their place to intervene. If the hedge funds over-shorted GME and WSB recognized that and traded against that…
I don't think this was Robinhood's choice. Robinhood doesn't actually execute any trades. They sell user's trade orders to Citadel, a trade executor. Citadel then buys the shares on the market, and sells them to Robinhood for a slight markup. It's how Robinhood offers trades for $0 fees. You pay pennies more per share, but don't have to spend $5 per trade. Citadel, and other trade executors, are refusing to buy share…
wow, this is a very apt explanation.
the best financial advice I ever got was to never ignore conflicts of interest.