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> They didn’t manipulate squat, they were fighting to save their life. These two things don't seem mutually exclusive. Actually, it seems like they'd be positi

> They didn’t manipulate squat, they were fighting to save their life. These two things don't seem mutually exclusive. Actually, it seems like they'd be positively correlated. If you're fighting to save your life, aren't you more likely to resort to manipulation? And certainly when the cost of fines is several orders of magnitude less than the cost of closing your position at that point, it seems downright economical.

lovehashbrowns 6y ago
It's entirely possible that RH doesn't care if the hedge fund loses all its money from the short and RH's buddy Citadel has to do a bail out to the tune of billions. In that scenario, RH still has to pause buy trades to save their own ass because they're running out of cash they need for the collateral that's required. Do note that RH is not the only one that paused buy trades. What I find more suspicious on RH's part is the timing of this all. RH should have known well before this week that GME was going to be a highly volatile stock. They should have already reached out to investors and banks for credit. They should have already had over a billion lined up to take on the volatility. I can understand other brokers like TD not being prepared because they might not be used to this Reddit-driven WSB volatility. RH, on the other hand, should have been ready. They've been aware of WSB and their antics since its inception. Yet they waited until Thursday to pause trades. That's where I start to go into conspiracy mode.
- valuearb 6y ago
  Yes, infinite credit lines are easily arranged within a one week notice for a thinly capitalized broker. Dont you realize how big a $1B credit line is for a broker with so few assets such as Robinhood?
  - lovehashbrowns 6y ago
    Sorry just to fully understand, "credit lines" is the issue here, yes?
    - valuearb 6y ago
      No, the issue is that Robinhood is a startup brokerage with likely very few actual assets. Go try to get a $2M short term loan using a $1M home as collateral. You will get laughed out of every bank in the country. Now try to get investors to invest $2M for half of your home, again the mirth and laughter will be rampant. Eventually you will find someone to lend or invest $700K but it will take months to close and meanwhile Robinhood is dead.
      - lovehashbrowns 6y ago
        Oh, I gotcha now. I am going off of this story: https://www.wsj.com/articles/robinhood-raises-1-billion-to-meet-surging-cash-demands-11611928504 https://www.wsj.com/articles/robinhood-raises-1-billion-to-m... Reading closer, they supposedly got ~$500 million from its banks as loans and $1 billion from existing investors. My issue is in not knowing when this was all initiated and how long it takes for the money to go from its current place(s) to Robinhood. Regardless, I am still learning all of this so thank you for replying and adding clarity.
  - deleted 6y ago
    [deleted]
valuearb 6y ago
If Robinhood wanted to manipulate the GME market, they would have banned selling, not buying. Driving GMEs price lower increases Robinhoods collateral requirements and pushes them closer to bankruptcy.
- yowlingcat 6y ago
  Why assume they'd only want to distort prices up rather than down? On the contrary, it seems to me that "banning selling, not buying" could be a useful tool for helping out some hypothetical buddies who would rather that a large tranche of 115s & 320s don't end up very inconveniently in the money.
  - valuearb 6y ago
    Why would they think about helping “some buddies” first when their house was on fire and about to collapse? Don’t you realize how extreme it was for them to have to borrow $1B in a single day?
    - yowlingcat 6y ago
      > Why would they think about helping “some buddies” first when their house was on fire and about to collapse? I wouldn't call it their house. I would call it partially /their/ house and partially a house owned by "some buddies."

lovehashbrowns 6y ago

It's entirely possible that RH doesn't care if the hedge fund loses all its money from the short and RH's buddy Citadel has to do a bail out to the tune of billions. In that scenario, RH still has to pause buy trades to save their own ass because they're running out of cash they need for the collateral that's required. Do note that RH is not the only one that paused buy trades. What I find more suspicious on RH's part is the timing of this all. RH should have known well before this week that GME was going to be a highly volatile stock. They should have already reached out to investors and banks for credit. They should have already had over a billion lined up to take on the volatility. I can understand other brokers like TD not being prepared because they might not be used to this Reddit-driven WSB volatility. RH, on the other hand, should have been ready. They've been aware of WSB and their antics since its inception. Yet they waited until Thursday to pause trades. That's where I start to go into conspiracy mode.

valuearb 6y ago
Yes, infinite credit lines are easily arranged within a one week notice for a thinly capitalized broker. Dont you realize how big a $1B credit line is for a broker with so few assets such as Robinhood?
- lovehashbrowns 6y ago
  Sorry just to fully understand, "credit lines" is the issue here, yes?
  - valuearb 6y ago
    No, the issue is that Robinhood is a startup brokerage with likely very few actual assets. Go try to get a $2M short term loan using a $1M home as collateral. You will get laughed out of every bank in the country. Now try to get investors to invest $2M for half of your home, again the mirth and laughter will be rampant. Eventually you will find someone to lend or invest $700K but it will take months to close and meanwhile Robinhood is dead.
    - lovehashbrowns 6y ago
      Oh, I gotcha now. I am going off of this story: https://www.wsj.com/articles/robinhood-raises-1-billion-to-meet-surging-cash-demands-11611928504 https://www.wsj.com/articles/robinhood-raises-1-billion-to-m... Reading closer, they supposedly got ~$500 million from its banks as loans and $1 billion from existing investors. My issue is in not knowing when this was all initiated and how long it takes for the money to go from its current place(s) to Robinhood. Regardless, I am still learning all of this so thank you for replying and adding clarity.
- deleted 6y ago
  [deleted]

valuearb 6y ago

If Robinhood wanted to manipulate the GME market, they would have banned selling, not buying. Driving GMEs price lower increases Robinhoods collateral requirements and pushes them closer to bankruptcy.

yowlingcat 6y ago
Why assume they'd only want to distort prices up rather than down? On the contrary, it seems to me that "banning selling, not buying" could be a useful tool for helping out some hypothetical buddies who would rather that a large tranche of 115s & 320s don't end up very inconveniently in the money.
- valuearb 6y ago
  Why would they think about helping “some buddies” first when their house was on fire and about to collapse? Don’t you realize how extreme it was for them to have to borrow $1B in a single day?
  - yowlingcat 6y ago
    > Why would they think about helping “some buddies” first when their house was on fire and about to collapse? I wouldn't call it their house. I would call it partially /their/ house and partially a house owned by "some buddies."