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The CEO just gave 3 interviews tonight and denied this was at all related to liquidity issues for the company in all 3 when pressed. Terrible look.

by tempsy 6y ago

n_io 6y ago
I’d imagine liquidity issues are the least of their concerns right now. At least, they would be to me.
- Clewza313 6y ago
  Why? For a brokerage it's an existential concern. And they can't publicly admit it's a problem either, because that would likely trigger the brokerage equivalent of a bank run. (Of course, odds are they're already grappling with that as well.)
  - bredren 6y ago
    I had a neutral to negative view toward this product before today. In part due to the product’s UX having to change after a customer killed themselves and cited the app in their suicide note. [1] I noticed that before but bad stuff happens, I had not heard of further issues and it was likely a series of contributing factors. That said, this bind broke the entire concept of the branding of the product. I’d never install this thing now. If they have broken the brand and lost trust of users, no amount of short or medium term liquidity will save the company. [1] https://news.ycombinator.com/item?id=23578794 https://news.ycombinator.com/item?id=23578794 https://suicidepreventionlifeline.org/ https://suicidepreventionlifeline.org/
    - Clewza313 6y ago
      They've lost the trust of people YOLOing on meme stonks. I'm sure it's a noisy part of their userbase, but still only a part. It would be interesting to see stats on how many people use RH for long-term investments (buy and hold, DCA, etc), and how many use it as a form of gambling (day trading, leveraged options etc).
      - jmalicki 6y ago
        The people YOLOing on meme stocks is what makes their orderflow so valuable to Citadel. Why would they be willing to pay so much for it if not for that flow? (At least until the past few weeks, where maybe now it's considered toxic)
      - AmericanChopper 6y ago
        > people YOLOing on meme stonks This is all that day trading is. Regardless of whether the traders even know what a meme subreddit is. Why would any day trader want to use a platform that’s going to do stuff like cut you out of an epic short squeeze? If a non-professional investor had sensible ideas, they wouldn’t be day trading.
        Clewza313 6y ago
        There's day trading, and then there's taking out credit card cash advances to buy leveraged call options on a stock that's already gone up 1000% in a month. Both are risky, but the day traders I've known wouldn't touch the latter with a barge pole.
        AmericanChopper 6y ago
        Would the day traders you know be happy using a brokerage who’s liquidity issue mean it’s had to ban trading certain securities? Even if they don’t want to YOLO like a maniac, why would you trust a company that’s had so many very public blunders with your money? It’s not like there aren’t more reputable zero-fee brokerages out there.
        stickfigure 6y ago
        ...which all did the same thing, no?
        AmericanChopper 6y ago
        Schwab/Ameritrade didn’t.
    - gonzo41 6y ago
      I tend to think that it's become too common to dabble in shares. And I know this is me being a bit snotty. But there's real risk there and when I started out, I didn't use an app. I went to an office with broker and did the orders. There's a certain risk with an app, and an echo chamber. A lot of people can make silly mistakes. And that's part of the market too, but that customer killing themselves over a bad trade is a tradgedy.
sdan 6y ago
And right after saying they don't have any liquidity problems said, "We're #1 on the app" while retail investors were losing millions because of expiring options/stocks. Absolutely tone-deaf. Not denying that all securities have risks, but that was a bad response imo.
- amscanne 6y ago
  Retail investors lost millions because of an inability to buy?
  - tonfa 6y ago
    I guess the theory from some people is that if they could have kept buying then the stock would go up (and trigger the squeeze). Not sure I buy it (esp with the amount of call options that are just going to magnify the move up but also the move down).
    - beagle3 6y ago
      This has been happening every day for a few days before the stop (perhaps a few weeks at a lower rate). Why don’t you “buy it”?
    - Armisael16 6y ago
      At the very least the price wouldn’t’ve have dropped 70%. That was an attack by institutional investors who sold relatively small amounts of stock at very low values. Normally retail users would’ve snapped it up cheap, but they can’t do that when their trading platform makes it impossible to buy.
  - conceptme 6y ago
    It will scare people off triggering a sell
  - jfim 6y ago
    I believe some margin positions got called and closed, which might not have been if more people continued to pump the stock by buying more.
sgpl 6y ago
A clip from one of those interviews: https://twitter.com/ChrisCuomo/status/1354994000294522881 https://twitter.com/ChrisCuomo/status/1354994000294522881 In the entire interview there's no real answer to any question.
- ThePadawan 6y ago
  > In the entire interview there's no real answer to any question. You know, I've been on many job interviews this past year, and when that happens, I immediately know not to go further with that person (and if it persists, the company).
- amscanne 6y ago
  His first answer was reasonably polished and okay. Then it all goes to shit. I guess he didn’t expect the third degree?
- moneywoes 6y ago
  He just deflects
  - einrealist 6y ago
    How does he deflect? He clearly states that the deposits at the clearinghouse became a problem. That does not hurt the immediate liquidity of the company itself, but does put a strain on credit lines for those deposits.
- boatsie 6y ago
  If it's all truthful, I don't understand why he doesn't just speak concretely. Eg, "For every $300 share of GME, based on the volatility, we were required to deposit $50/share as collateral. We expected 1,000,000 shares to be bought and don't have $50m we can post." Also, if true, shouldn't other brokerages would be able to confirm/deny this as they would be subject to the same depository requirements?
boatsie 6y ago
"We have no liquidity issues. We just need more liquidity." Reminds me of "depends on what your definition of 'is' is".

The CEO just gave 3 interviews tonight and denied this was at all related to liquidity issues for the company in all 3 when pressed. Terrible look.

by tempsy 6y ago

The CEO just gave 3 interviews tonight and denied this was at all related to liquidity issues for the company in all 3 when pressed. Terrible look.

n_io 6y ago

I’d imagine liquidity issues are the least of their concerns right now. At least, they would be to me.

Clewza313 6y ago
Why? For a brokerage it's an existential concern. And they can't publicly admit it's a problem either, because that would likely trigger the brokerage equivalent of a bank run. (Of course, odds are they're already grappling with that as well.)
- bredren 6y ago
  I had a neutral to negative view toward this product before today. In part due to the product’s UX having to change after a customer killed themselves and cited the app in their suicide note. [1] I noticed that before but bad stuff happens, I had not heard of further issues and it was likely a series of contributing factors. That said, this bind broke the entire concept of the branding of the product. I’d never install this thing now. If they have broken the brand and lost trust of users, no amount of short or medium term liquidity will save the company. [1] https://news.ycombinator.com/item?id=23578794 https://news.ycombinator.com/item?id=23578794 https://suicidepreventionlifeline.org/ https://suicidepreventionlifeline.org/
  - Clewza313 6y ago
    They've lost the trust of people YOLOing on meme stonks. I'm sure it's a noisy part of their userbase, but still only a part. It would be interesting to see stats on how many people use RH for long-term investments (buy and hold, DCA, etc), and how many use it as a form of gambling (day trading, leveraged options etc).
    - jmalicki 6y ago
      The people YOLOing on meme stocks is what makes their orderflow so valuable to Citadel. Why would they be willing to pay so much for it if not for that flow? (At least until the past few weeks, where maybe now it's considered toxic)
    - AmericanChopper 6y ago
      > people YOLOing on meme stonks This is all that day trading is. Regardless of whether the traders even know what a meme subreddit is. Why would any day trader want to use a platform that’s going to do stuff like cut you out of an epic short squeeze? If a non-professional investor had sensible ideas, they wouldn’t be day trading.
      - Clewza313 6y ago
        There's day trading, and then there's taking out credit card cash advances to buy leveraged call options on a stock that's already gone up 1000% in a month. Both are risky, but the day traders I've known wouldn't touch the latter with a barge pole.
        AmericanChopper 6y ago
        Would the day traders you know be happy using a brokerage who’s liquidity issue mean it’s had to ban trading certain securities? Even if they don’t want to YOLO like a maniac, why would you trust a company that’s had so many very public blunders with your money? It’s not like there aren’t more reputable zero-fee brokerages out there.
        stickfigure 6y ago
        ...which all did the same thing, no?
        AmericanChopper 6y ago
        Schwab/Ameritrade didn’t.
  - gonzo41 6y ago
    I tend to think that it's become too common to dabble in shares. And I know this is me being a bit snotty. But there's real risk there and when I started out, I didn't use an app. I went to an office with broker and did the orders. There's a certain risk with an app, and an echo chamber. A lot of people can make silly mistakes. And that's part of the market too, but that customer killing themselves over a bad trade is a tradgedy.

sdan 6y ago

And right after saying they don't have any liquidity problems said, "We're #1 on the app" while retail investors were losing millions because of expiring options/stocks. Absolutely tone-deaf. Not denying that all securities have risks, but that was a bad response imo.

amscanne 6y ago
Retail investors lost millions because of an inability to buy?
- tonfa 6y ago
  I guess the theory from some people is that if they could have kept buying then the stock would go up (and trigger the squeeze). Not sure I buy it (esp with the amount of call options that are just going to magnify the move up but also the move down).
  - beagle3 6y ago
    This has been happening every day for a few days before the stop (perhaps a few weeks at a lower rate). Why don’t you “buy it”?
  - Armisael16 6y ago
    At the very least the price wouldn’t’ve have dropped 70%. That was an attack by institutional investors who sold relatively small amounts of stock at very low values. Normally retail users would’ve snapped it up cheap, but they can’t do that when their trading platform makes it impossible to buy.
- conceptme 6y ago
  It will scare people off triggering a sell
- jfim 6y ago
  I believe some margin positions got called and closed, which might not have been if more people continued to pump the stock by buying more.

sgpl 6y ago

A clip from one of those interviews: https://twitter.com/ChrisCuomo/status/1354994000294522881 https://twitter.com/ChrisCuomo/status/1354994000294522881 In the entire interview there's no real answer to any question.

ThePadawan 6y ago
> In the entire interview there's no real answer to any question. You know, I've been on many job interviews this past year, and when that happens, I immediately know not to go further with that person (and if it persists, the company).
amscanne 6y ago
His first answer was reasonably polished and okay. Then it all goes to shit. I guess he didn’t expect the third degree?
moneywoes 6y ago
He just deflects
- einrealist 6y ago
  How does he deflect? He clearly states that the deposits at the clearinghouse became a problem. That does not hurt the immediate liquidity of the company itself, but does put a strain on credit lines for those deposits.
boatsie 6y ago
If it's all truthful, I don't understand why he doesn't just speak concretely. Eg, "For every $300 share of GME, based on the volatility, we were required to deposit $50/share as collateral. We expected 1,000,000 shares to be bought and don't have $50m we can post." Also, if true, shouldn't other brokerages would be able to confirm/deny this as they would be subject to the same depository requirements?

boatsie 6y ago

"We have no liquidity issues. We just need more liquidity." Reminds me of "depends on what your definition of 'is' is".