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> 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 e
by 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 agoI 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]