4 ms·

Robin hood has been called so many strange names and then gets no recognition when they want to strike at the root of the problem.

marcinzm 6y ago
Robinhood knew A was the case when it did B. Given A, B can cause really bad things. Then it failed to properly communicate as the bad things started to happen. Now it's blaming A rather than its decision to do B or its failure to communicate.
paxys 6y ago
The whole episode has been a case study for how not to handle PR. Robinhood lost the public narrative every step of the way, and all their statements were late, lacking in detail and even contradictory. Remember the now-famous "we don't have a cash flow problem" statement from their CEO, right before they had to borrow a billion dollars to stay in business?
- ummonk 6y ago
  Right, and it is noteworthy to compare the PR from Webull in response to similar issues. RobinHood’s PR problems are entirely self-inflicted.
  - swampthing 6y ago
    Agreed. It's sad/shocking to see a China-run company out-execute a homegrown, well-funded US startup on public relations with the US market.
IgorPartola 6y ago
The simple issue that I saw with RH is that they restricted the ability to buy stocks like GME but not the ability to sell. It’s one thing to freeze the stock in place. It’s an entirely different thing to basically create a situation where your actions drive the price down while only letting investors sell. I will be honest I don’t entirely grasp the situation, but this seems to me like it was not just a bad PR situation but rather that they actually did something wrong.
- astrange 6y ago
  They didn't do anything wrong, they are not allowed to restrict sales, and they were forced to restrict buys because you can't get $3 billion collateral overnight.
  - IgorPartola 6y ago
    Then why are they in this business if they don’t have the collateral? If I have the money in my RH account to buy the stock, why can’t I buy it? I understand restricting buying on margin because obviously that’s affected by volatility, but if I am bringing cash to a transaction, why is it suddenly restricted? I don’t really have a horse in this race, I am just trying to understand how it’s ok for them to put their thumb on the scale in this way and then say that they didn’t have enough collateral and someone that is retail investors’ problem.
    - astrange 6y ago
      > Then why are they in this business if they don’t have the collateral? The grocery store doesn't deserve to go out of business if they run out of paper towels sometimes. > but if I am bringing cash to a transaction, why is it suddenly restricted? They can't use your cash as collateral due to preexisting rules (part of new regulations after 2008). They have to use their own, and in this case it wasn't infinite.
      - IgorPartola 6y ago
        They aren’t a grocery store. If they were out of GME stock to buy nobody would hold it against them. That wasn’t the case. I clearly don’t understand the regulations around this. It seems to me that when stock is volatile is exactly when I should be buying and selling and if my broker can’t make that happen it’s a problem, no? And it’s also a problem that their inability to trade that stock affects the price. So what is the correct solution here?
        astrange 6y ago
Illniyar 6y ago
If you allow yourself to take the blame, and don't point the finger at th real culprit when asked you can't be surprised when no one accepts it when later you do.
amznthrwaway 6y ago
This is not the root of the problem. This is a distraction. Nothing more. It sucks that some people (you) are so easily deceived. The root of the issue was that they issued margin accounts by default, and did not have adequate capital to meet the collateral required when those accounts were used to buy a single volatile name. There would have been no problem if they issued cash accounts by default; if they raised margin capital as they opened new accounts; or if the users had bought a bunch of VT.

marcinzm 6y ago

Robinhood knew A was the case when it did B. Given A, B can cause really bad things. Then it failed to properly communicate as the bad things started to happen. Now it's blaming A rather than its decision to do B or its failure to communicate.

paxys 6y ago

The whole episode has been a case study for how not to handle PR. Robinhood lost the public narrative every step of the way, and all their statements were late, lacking in detail and even contradictory. Remember the now-famous "we don't have a cash flow problem" statement from their CEO, right before they had to borrow a billion dollars to stay in business?

ummonk 6y ago
Right, and it is noteworthy to compare the PR from Webull in response to similar issues. RobinHood’s PR problems are entirely self-inflicted.
- swampthing 6y ago
  Agreed. It's sad/shocking to see a China-run company out-execute a homegrown, well-funded US startup on public relations with the US market.

IgorPartola 6y ago

The simple issue that I saw with RH is that they restricted the ability to buy stocks like GME but not the ability to sell. It’s one thing to freeze the stock in place. It’s an entirely different thing to basically create a situation where your actions drive the price down while only letting investors sell. I will be honest I don’t entirely grasp the situation, but this seems to me like it was not just a bad PR situation but rather that they actually did something wrong.

astrange 6y ago
They didn't do anything wrong, they are not allowed to restrict sales, and they were forced to restrict buys because you can't get $3 billion collateral overnight.
- IgorPartola 6y ago
  Then why are they in this business if they don’t have the collateral? If I have the money in my RH account to buy the stock, why can’t I buy it? I understand restricting buying on margin because obviously that’s affected by volatility, but if I am bringing cash to a transaction, why is it suddenly restricted? I don’t really have a horse in this race, I am just trying to understand how it’s ok for them to put their thumb on the scale in this way and then say that they didn’t have enough collateral and someone that is retail investors’ problem.
  - astrange 6y ago
    > Then why are they in this business if they don’t have the collateral? The grocery store doesn't deserve to go out of business if they run out of paper towels sometimes. > but if I am bringing cash to a transaction, why is it suddenly restricted? They can't use your cash as collateral due to preexisting rules (part of new regulations after 2008). They have to use their own, and in this case it wasn't infinite.
    - IgorPartola 6y ago
      They aren’t a grocery store. If they were out of GME stock to buy nobody would hold it against them. That wasn’t the case. I clearly don’t understand the regulations around this. It seems to me that when stock is volatile is exactly when I should be buying and selling and if my broker can’t make that happen it’s a problem, no? And it’s also a problem that their inability to trade that stock affects the price. So what is the correct solution here?
      - astrange 6y ago

Illniyar 6y ago

If you allow yourself to take the blame, and don't point the finger at th real culprit when asked you can't be surprised when no one accepts it when later you do.

amznthrwaway 6y ago

This is not the root of the problem. This is a distraction. Nothing more. It sucks that some people (you) are so easily deceived. The root of the issue was that they issued margin accounts by default, and did not have adequate capital to meet the collateral required when those accounts were used to buy a single volatile name. There would have been no problem if they issued cash accounts by default; if they raised margin capital as they opened new accounts; or if the users had bought a bunch of VT.