First of all, it does reduce risk because it avoids further downside. Just because a stock can come back up doesn't mean it didn't lose real value even before r

First of all, it does reduce risk because it avoids further downside. Just because a stock can come back up doesn't mean it didn't lose real value even before realizing the loss. Second, this is not about the individual's risk of losing money. This is about Robinhood losing money because they lent him money. And about why they didn't give him a chance to provide further collateral is simply because there wasn't enough time. I watched the stock drop from over $400 to $125 in just over an hour. Not sure what you could expect Robinhood to do in that situation.