GameStop Rebellion

Zerohedge;

Something bad is about to go down at Robinhood.
 
One day after the company drew down on its bank lines and obtain a $1 billion rescue capital investment, the company found itself in lockdown mode, allowing just a handful of shares to be bought at a time, effectively shutting down in all but name (it couldn’t risk another day of furious public outcry and massive client departures if it blocked trading completely).
 
However, just before the close, things got downright surreal when in a blog post the broker – which should probably change its name from Robinhood to Suit – made a shocking announcement: going forward, customers will be subject to maximum aggregate limits in 51 securities of which 14 are capped at position limits of just 5 shares, while allowing total holdings in 36 securities to be just one share! […]
 
Why is this happening? The most likely reason is that between DTC, clearinghouses and other regulatory entities, Robinhood was found to be in another capital deficiency position – even with the billions raised overnight – and it is being forced to delever. (sic)
 
This likely means that Robinhood is as of this moment, scrambling to obtain even more capital, although we somehow doubt it will be just as easy to “take from the rich” as it was late last night especially since the client exodus is surely accelerating.
 
It also means that we may have to have another “Lehman Weekend” situation on our hands, only this time it will be a “Robinhood Weekend”, and an urgent acquisition from a strategic buyer may be required to prevent the worst case outcome. We only hope that the billions in funds held in custody for clients is segregated should the company collapse (pinging Jon Corzine here).
 
In any case, expect a lot of Robinhood related news over the weekend.

Related: the Uniparty has decided to investigate these troublemaking likely-Nazis!!!

39 Replies to “GameStop Rebellion”

  1. I suspect that commission-free brokerages like Robin Hood have gotten themselves into trouble by relying on selling their orders to houses that skim off slim settlement margins leaving them tight for capital requirements when shit happens and then screwing your customers to stay afloat is not a good business model.

    1. That has to be their bread and butter, skimming on execution. Although it has been said they they also sell data to…..hedge funds. That and they are also in the split share racket, when i first heard of it I though of the McDonald’s model, make a little, a lot of times.

  2. Anyone else see the irony in the name “Robinhood”? Maybe they should change their name to Dennismoore.

    “Dennis Moore, Dennis Moore
    Riding through the woods
    Dennis Moore, Dennis Moore
    With a bag of goods.
    He steals from the poor
    And gives to the rich…
    Stupid bitch!”
    -Monty Python

  3. Flame away if you will, but has anyone else noticed how poorly written articles are becoming? I love Instapundit.com, but at least half of their explanatory paragraphs make NO SENSE to an English reader. The above article is another example-the writer seems to assume that everyone knows what he’s talking about when he talks Wall Street language. Keep it simple! Use words that non Wall Street traders can understand.

      1. I would suggest that gambling on Wall Street is still gambling in the purest sense of the word.

    1. Perhaps I can translate.

      Robin hood is in trouble because they have a loan coming due that they don’t have the cash to cover. Someone floated them a loan (approx a billion or so) but due to the conditions on what it is they owe (it’s the value of the GameStop shares they borrowed from the broker) the debt keeps going up to the point that a billion isn’t going to cover the loan, and worse, they sold the shares and can’t fund a buy.
      That’s a short feeble attempt at a translation, albeit cheap and dirty, and there are some pertinent details that I likely neglected to mention.
      But I digress.
      A lot of these transactions are based on value not net worth ( what the list price is vs what the thing is actually worth). I suspect that once the autopsy is conducted over this event it could reveal that some of the hedge fund operators where playing not with actual wealth, but with the expected return on investment (aka funny money).
      In other words, how many of the short sellers in the Wall Street club use valuation to buy?
      Someone at Robinhood was able to convince someone to cover their potential loss by floating them a billion, you don’t loan a billion unless there is a payoff with interest.
      So the interesting question I have is, who stands to recover one billion plus when the smoke clears?

      1. I don’t have any particular knowledge but was Robinhood gambling against it’s own clients? All trades don’t happen on the floor of the stock exchange. If a broker can match buys and sells internally, they do so. Did some idiot at Robinhood cover the buys thinking the stock would imminently tank?

    2. Zerohedge is by and for people who follow financial markets. Audience-specific publications have never dumbed down their content for a general audience; that makes them useless to their actual audience.

  4. Where to go from here? I think more popcorn is needed to go with the wine I bottled today.

    Please remind me, does white or red wine go best with schadenfreude? I’m guessing white, but it’s a hard call. Does that make me a racist?

    1. Sounds like you’ve got the popcorn covered.

      And a good supply of wine in case of a big blow up.

      And the opportunity to cheer it on with “striped wine”

      1. “Today it is more red than white.” from the Royal Canadian Air Farce, in a less enlightened time.

        Recognizing the fall, not cheering it on.

    2. If your in a celebratory mood, champagne.
      If it’s a celebration but with lots of dancing, sangria.
      If this is a sit down type of celebration where the assembled recount tales of past successes, cocktails.
      If this is like gladiator night at the forum where you haven’t picked a side, lager and ale.

  5. On warroom today Jack Posobiec read this post from reddit.

    Redditor Shares Heartbreaking Reason For Destroying Short-Sellers

    This is for you, Dad.
    I remember when the housing collapse sent a torpedo through my family. My father’s concrete company collapsed almost overnight. My father lost his home. My uncle lost his home. I remember my brother helping my father count pocket change on our kitchen table. That was all the money he had left in the world. While this was happening in my home, I saw hedge funders literally drinking champagne as they looked down on the Occupy Wall Street protestors. I will never forget that.

    My Father never recovered from that blow. He fell deeper and deeper into alcoholism and exists now as a shell of his former self, waiting for death.

    This is all the money I have and I’d rather lose it all than give them what they need to destroy me. Taking money from me won’t hurt me, because i don’t value it at all. I’ll burn it all down just to spite them.

    This is for you, Dad.
    https://www.zerohedge.com/personal-finance/you-dad-redditor-shares-heartbreaking-reason-destroying-short-sellers-wsb-raids

      1. Burning cold hard cash can warm the soul.
        These are the lost generation.
        Gamestop visits would have been their Disneyland. Then they went to (the basement if they were lucky) or to their room to get lost to reality in a video game.
        When the sub-prime crisis hit the guys getting close to retirement lost their house and had to find work. A lot of them couldn’t retire and displaced the jobs that would have been open to the next generation.
        The derivative party never ended and morphed from bundling and trading toxic sub-prime mortgages to the current open short sell.
        Wall Street wanted more money.
        Gen X wanted their revenge MOAR

    1. That’s so sad. I think back to all the times when companies shut down and people who grew up on the notion of a job for life were thrown to the wolves. It sickens me that these Wall Street types have no sense of patriotism or deep shame for sending our jobs overseas in order to create a middle class in China or India at the expense of our own people. Tarring and feathering is needed.

  6. Something bad about to happen?
    From the sounds of it, it appears the Wall Street club is about to cull the herd.
    That or the fallout from this may effect the denizens in DC (plausible but not expected).
    The prognosis is based on the dollar figure of the loan to Robinhood.
    You don’t float a “loan” of that size unless you know there is a return with interest or its actually an extortion payment.
    Here let me affix my tinfoil hat and offer a theoretical quote from a theoretical conversation.

    “If we go down, we intend to have company.”

  7. I think it is more Rage Against The Machine than anything. It is the same as the Election of Trump. Trump was elected because all through the western nations people have had it with the TAX FARM and the system were they are forced to work all their lives like TAX DONKEYS to support the Bureaucracy. The Man, the system etc. It is the same as the rise of Crypto, these are related. People are finding ways to disconnect from the scam and do for themselves. They see the system is failing, and they are beginning to reject everything.
    Read up on crypto and DeFi it is growing fast people are sick of the over taxation and the endless regulation of the Bureaucracy.
    https://www.coindesk.com/what-is-defi

    1. I never will touch crypto currencies or any form of electronic money. Do you really think it is secure? That it cannot be manipulated or stolen by governments?

      1. Yes, I do, because that is how crypto works.

        Government could theoretically shut down crypto, but only by kneecapping the Internet in ways that would destroy modern society and the economy. Of course, they’re in the process of doing that anyway.

    2. That was the founding ethos of the United States. People saw the system in the Old Country would never allow them room to rise much above serfdom. In the New World there was nothing but Nature to oppress them, and they saw that whatever they could make there, however little it might be, they could keep for themselves. So they crossed the ocean at great risk to live in a wilderness much wilder than the one that was a distant legend long gone from their homelands

  8. I’m sort of thinking this might be a good time to invest in the meathook manufacturing business.

  9. The Wall Streeters and their b**t boys at the SEC are going to try to picture the GME buyers as pump and dumpers. They look more like religious crusaders to me.

  10. What would be funny is if some hedge fund starts shorting RobinHood, and the same thing happens again.

  11. When Steve Cohen and Ken Griffin are the ones promptly cutting billion $ checks to a fellow HFer, Melvin Capital*, you can bet their HFT operations did most of the run up from $18 to $250+ where Melvin finally covered their supremely shtupidly financed short under$10 to under$5. Why is $5 so important? Because large institutions are supposed to be prohibited from trading there. Melvin loaded up on their existing, winning short trying to force it to zero, an asymptotic trade, at best.

    Technical note, shorting stock requires at least 150% of the notional value be in the account, in cash or marginable securities, before you can even go look to borrow shares to “Sell short against the box”, which is the actual legal term. Seasoned buyers, on the other hand, can take advantage of “regular way settlement” and not have to come up with the cash to cover a trade for 3 days. Individual brokerage firms can set up stricter rules than that, as they indeed do, especially in margin accounts.

    On another note, how you can get past 100% of the float, which is the share count that’s actually in public hands, is through options positions, which are called synthetic shorts, such as nakedly short calls.

  12. I know not many of you do not appreciate the once-in-a-lifetime genius of Bob Dylan, because he identified (formerly was identified) as a leftist … but all I can think of regarding our current “leveraged” culture is …

    At Napoleon in rags and the language that he used
    Go to him now, he calls you, you can’t refuse
    When you ain’t got nothing, you got nothing to lose
    You’re invisible now, you got no secrets to conceal

    These Redditeers ain’t got nothing to lose … the Hedge Funders, and the UniParty which lives off their largess do have LOTS to lose. And why did our cities burn for 7 months? Because ANTIFA and BLM thugs ain’t got nothing to lose. Why? In part, because The American Dream has been mangled beyond recognition or attainment by the lies of leverage and a quick buck.

    Well … the scales are falling from everyone’s eyes (my own included) … and the Rotten Power Structure that has SOLD OUT our Nation and our Constitution has been revealed … they have no more secrets to conceal … which is why The Pelosi-Harris Admin. are not even trying to hide their wanton trashing of our Constitution.

    It’s gonna get worse. We will ALL be in rags … after our wealth is stolen via redistribatory taxation and hyper inflation. I am not very optimistic … sorry. Perhaps the Preppers are finally right. Dylan’s scathing indictment of transitory personal wealth has just exploded into an indictment of Wall Street and Governmental Excess.

    PS … remember … the 2008 housing crash and TARP was CREATED by the Senate Banking Committee’s demand that Banks and Real Estate Lenders Loan money to POC who couldn’t actually pay for their loans. And now … all the leftist government can think of is prosecuting Redditteers. Hi! We’re from the government, and we’re here to help. Soon … we will all be begging Chairman Xi for a bowl of rice.

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