Lol what “the massive majority of meme stock investors want” is literally meaningless.
None of this would matter at all if it wasn’t some stupid bubble. If these people really think the stock is fairly valued at $500 or whatever then just ride out whatever temporary market blip is caused by Robinhood pausing buys for two days.
I’m not that up on Robinhood’s capital structure but no I don’t think this was predictable lol.
Yeah, that’s definitely the criticism. I just feel that it deserves praise instead. I’m sure that is the minority view in society and it may well be a minority view on unstuck as well.
I’m sort of with you, but just be aware that the result is basically going to be a lot of randoms handing their money to option market makers.
Well if I understood @JonnyA 's explanation correctly, if the sells balance out the buys, they need less cash for the clearing process. The problem is that they only had buys. Allowing sells reduces the imbalance and reduces the amount of cash they would need.
Is that the real reason? Perhaps not. But it is plausible.
They couldn’t predict they’d need more cash due to insane GME shenanigans? I thought you knew what you were talking about lol. Can someone else help me out here
So be it.
Obviously, I’d rather it didn’t play out that way. But I’d prefer that to having the restriction in place on everyone.
Predict it, when? I’m sure they saw it coming at some point before they actually raised the cash? These conspiracy theories are so fucking stupid. I know “Reddit must be allowed to manipulate the market without interruption!1!!!1111!!!11!” is a popular view among guillotine types and other assorted retards but it’s a stupid view.
Also, the end result of this is not going to be reddit taking money from hedge funds… it’s such an obviously good idea to be short Gamestop at $325/share that someone will step in and loan them enough money so they don’t have to close out the position. It’s going to be mostly Redditors taking money from other Redditors and some funds losing some money along the way.
Its possible. Stuff like this tends to cascade.
lmao you really think it’s CONSPIRATORIAL to suggest perhaps Robinhood is hiding behind regulatory obligations instead of taking on more cash on like Monday. It seems pretty likely they could have avoided pausing buys if they wanted to
My understanding is that RH and other brokers are required to post collateral with the clearinghouse to make sure all of these trades successfully close. The tricky part is how much they need to post. Even if RH is fully aware of how much volume is happening, they can still get surprised by the amount of required collateral if the expected volatility of the underlying stock skyrockets, because that triggers a much higher collateral requirement. I don’t think it’s reasonable at all for RH to have predicted this absolutely insane price movement on GME. (That doesn’t excuse them for not being sufficiently capitalized to deal with it, though.)
And I think (but am not positive) that having a roughly balanced order flow (where buys equal sells in a given security) lessens the required collateral. So if they were getting overwhelmed by buy orders and face zero sells (because wsb keeps encouraging everyone to HODL), then I can understand why they’d have to limit the sell side, but not the buy side.
Obviously this was all a shit show, and I’m sure RobinHood and the exchanges and Sarbanes-Oxley and the hedge funds all share some blame. But I’ll be stunned if the explanation is anything close to “Actually, Citadel just told RH to stop allowing buys in order to allow Citadel to profit on their shorts, or Citadel would retaliate by no longer purchasing RH’s order flow.” I mean, all the popcorn in the world if that’s true, I just think it’s extraordinarily unlikely.
Conspiratorial that they are hiding behind regulatory obligations for decisions that they bear some of the responsibility for? No, that’s obvious common sense.
Conspiratorial that they are blocking buys for a couple of days because the lizard people forced them to in order to keep the poors down? Yes, lol.
There is very little difference between the two options if you change the oh-so-clever lizard people to, you know, the people funding RH.
The only question here is would RH block the plebs from trading if big HF didn’t have a position against those stock. My guess is that they would have found the necessary collaterals somehow in that case.
Robinhood doesn’t care if some hedge funds lose money. This is the conspiracy theory bullshit.
But even if they did, it doesn’t even matter! The reddit people are explicitly manipulating the stock! If the stock is actually fundamentally worth $325 then Robinhood’s actions will have no long term effect.
FYP
I don’t think this has ever happened before where the value of a stock has been so completely detached from the value of the underlying company. I don’t think anything close to this has ever happened before. Whatever financial models they were using to determine the capital they needed almost certainly did not consider such an event.
Lol fundamental value.
Level?
how do we do rainbow text here
I don’t know who you are, but you clearly never worked in tech and have no idea how funding works.
If you don’t think RH would have found the necessary cash to keep operating if this was a different stock, i got some Nigerian friends you might be interested in meeting.
And lol who gives a fuck about gme “true value”.
