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Is it true the company that owns Robinhood also has a huge short exposure to GME?
by throwaway69123 6y ago
Is it true the company that owns Robinhood also has a huge short exposure to GME?
- alexdumitru 6y agoThey don't own it, but they're their largest customer.
- luxuryballs 6y agoAin’t that some shit.
- leroy_masochist 6y agoCitadel is not a Robinhood customer like retail investors are customers; they're a) an execution partner who executes Robinhood's trades and b) a source of revenue because they actually pay Robinhood for the privilege of doing this. It's worth it to Citadel because they can use the information in the order flow to front-run the retail market.
- sudosysgen 6y agoRetail investors aren't really the customers, unless they borrow margin really they're the product.
- findthewords 6y agoIn other words, Citadel is a customer of RH while the app's user data is the product.
- xiphias2 6y agoExactly, but if RH loses the product, it loses the customer as well, so it was a lose-lose situation that was created by the business model.
- thekyle 6y agoSeems similar to the users vs. customers (advertisers) situation that most websites have.
- ubiquitysc 6y agoI'm not sure why that's getting passed around. Citadel does not own Robinhood. They perform trades for Robinhood though.
- tqkxzugoaupvwqr 6y agoRobinhood is a customer of Citadel to execute trades. Citadel lent $2.5 billion to the fund that shorted Gamestop. If that fund goes bust, Citadel won’t get its money back. It’s possible they pressure Robinhood to disallow buying Gamestop shares so the price doesn’t increase and the fund won’t suffer a fatal blow. It’s also possible Citadel simply doesn’t accept Buy orders anymore and Robinhood reacted to that by disabling the Buy button for Gamestop shares.
- ivalm 6y agoMelvin capital exited the short position two days ago, the loss is realized. Edit: It was a company announcement material to the fund's prospects, if they lied it would be grounds for a securities fraud suit from their investors. Sometimes the world is not a big conspiracy out to get you.
- cwwc 6y agoBut citadel subsequently took a new short position
- ivalm 6y agoCitadel securities is an MM in this business, they are certainly delta neutral and not short.
- llampx 6y agoThere's Citadel the market maker and Citadel the hedge fund.
- ivalm 6y agoAll 3 Citadel companies belong to Ken Griffin/are related and are unlikely to have meaningful short positions.. The company that is Robinhood's customer and pays for order flow is Citadel Securities, which is the market maker and is definitely not short GME. Citadel (hedge fund), is not short GME as they generally sell boring complicated solutions to rich people (fixed income, insurance, hedges etc). They do invest into other funds (like Melvin Capital), which may give them indirect exposure to the shorts. Citadel technologies, sells their tech.
- ivalm 6y agoNo! But the hedge fund that is Robinhood's largest customer does have very large investments in a different hedge fund that had a large short position that they have since existed. But that exit (and corresponding loss) happened before the buy prevention. There is a bunch of FUD going on.
- paxys 6y agoIt's...complicated. Citadel (a fund) loaned a bunch of money to Melvin Capital which has a huge short position in GME. Citadel Securities, a separate entity, pays Robinhood a lot of money for data about its orders and helps execute these orders, while simultaneously using the data to make favorable trades for themselves. Citadel (the fund) and Citadel Securities are both owned by Citadel LLC, but supposedly operate completely independently with no collusion. "Citadel owns Robinhood" however is completely false.
- markdown 6y ago> Citadel (the fund) and Citadel Securities are both owned by Citadel LLC, but supposedly operate completely independently with no collusion. ROFL