4 ms·

Robinhood may be between a rock and a hard place if the SCC finds that the discussions on Reddit constituted a conspiracy to manipulate the market, primarily us

by KMag 6y ago

Robinhood may be between a rock and a hard place if the SCC finds that the discussions on Reddit constituted a conspiracy to manipulate the market, primarily using Robinhood, that Robinhood must have been aware of. Robinhood probably is also trying to protect most of its users from being the last ones holding the hot potato. Robinhood has very little incentive to conspire with hedge funds, but every reason to protect their users form themselves, if they think many of their users are taking on risks that will likely hinder their ability and/or willingness to use Robinhood in the future. This should not be construed as investment advice for or against GME at its current price.

nawgz 6y ago
> Robinhood probably is also trying to protect most of its users from being the last ones holding the hot potato This narrative is false. Robinhood users are executing a short squeeze on Melvin Capital, who have shorted the stock which gives them an obligation to buy the stock when their short expires at whatever price it exists at. They stock is also "over-shorted" (sorry I'm not wise in this domain), so they are literally obligated to buy at whatever price the stock is at. The hot potato holders are those who have to cover their short position. Robinhood traders are not these users; no casual retail trader short stocks. tl;dr Robinhood and others are participating in collusion and market manipulation to prevent Robinhood users from finishing a short squeeze which would extract billions from Melvin Capital, who have already received a multi-billion bailout on their ridiculous short position
- KMag 6y ago
  I know what a short squeeze is. The problem is that you may have tons of people planning to exit right around the same time, and there may not be enough trading volume for them to get out at prices they're happy with. The fear is that many Robinhood users may not realize that exiting their position may be much much harder than they expect. If the entire value proposition is that Melvin Capital is being squeezed, what happens to the price of GME the moment after Melvin Capital exits their position? This should not be construed as investment advice in any way.
- deleted 6y ago
  [deleted]
0x426577617265 6y ago
Not a lawyer -- I think those conversations would fall under free speech. A coordinated effort to buy shares, what's the problem? Are investors suppose to buy shares with blinds on and not talk to anyone? There are entire TV programs that are dedicated to talking about good/bad stocks to buy/sell.
insickness 6y ago
> Robinhood probably is also trying to protect most of its users from being the last ones holding the hot potato. But this could happen with literally any stock that crashes. RH doesn't protect their users in any way from losing money in the stock market so to try to claim they are simply doing this for users seems flimsy.
- KMag 6y ago
  > But this could happen with literally any stock that crashes. You're leaving the probability of a crash out of your analysis. If the value proposition of GME is based on the short squeeze (hypothetically speaking... I'm not saying it is or isn't), what happens when either all of the shorts capitulate, or the price reverses direction? You're likely to see liquidity dry up. Don't pretend like GME is behaving just like all of the other stocks today. There are legitimate reasons for RH to be concerned about GME in ways that don't make sense for most other names.

by KMag 6y ago

nawgz 6y ago

> Robinhood probably is also trying to protect most of its users from being the last ones holding the hot potato This narrative is false. Robinhood users are executing a short squeeze on Melvin Capital, who have shorted the stock which gives them an obligation to buy the stock when their short expires at whatever price it exists at. They stock is also "over-shorted" (sorry I'm not wise in this domain), so they are literally obligated to buy at whatever price the stock is at. The hot potato holders are those who have to cover their short position. Robinhood traders are not these users; no casual retail trader short stocks. tl;dr Robinhood and others are participating in collusion and market manipulation to prevent Robinhood users from finishing a short squeeze which would extract billions from Melvin Capital, who have already received a multi-billion bailout on their ridiculous short position

KMag 6y ago
I know what a short squeeze is. The problem is that you may have tons of people planning to exit right around the same time, and there may not be enough trading volume for them to get out at prices they're happy with. The fear is that many Robinhood users may not realize that exiting their position may be much much harder than they expect. If the entire value proposition is that Melvin Capital is being squeezed, what happens to the price of GME the moment after Melvin Capital exits their position? This should not be construed as investment advice in any way.
deleted 6y ago
[deleted]

0x426577617265 6y ago

Not a lawyer -- I think those conversations would fall under free speech. A coordinated effort to buy shares, what's the problem? Are investors suppose to buy shares with blinds on and not talk to anyone? There are entire TV programs that are dedicated to talking about good/bad stocks to buy/sell.

insickness 6y ago

> Robinhood probably is also trying to protect most of its users from being the last ones holding the hot potato. But this could happen with literally any stock that crashes. RH doesn't protect their users in any way from losing money in the stock market so to try to claim they are simply doing this for users seems flimsy.

KMag 6y ago
> But this could happen with literally any stock that crashes. You're leaving the probability of a crash out of your analysis. If the value proposition of GME is based on the short squeeze (hypothetically speaking... I'm not saying it is or isn't), what happens when either all of the shorts capitulate, or the price reverses direction? You're likely to see liquidity dry up. Don't pretend like GME is behaving just like all of the other stocks today. There are legitimate reasons for RH to be concerned about GME in ways that don't make sense for most other names.