An inability to buy means an inability to squeeze the short harder, and depending on how hard you have squeezed that can affect the overall success of the squeeze.
Also they apparently forced sale on some accounts, which combined with an inability to buy more, definitely affected stock prices.
No proof either way, with many accounts claiming and sharing screenshots of margin trading being disabled in their accounts, and it's more likely that these forced sales were due to the delay between RH and the banks, rather than being a normal margin between RH and the clearance house.
Imagine buying a lottery ticket from me. I run the lottery. I print it out, look at it, oooh, you know what, I can't sell you this one. Of course you don't need to pay. Goodbye. Did you lose money?
you completely missed the point. the fact that the squeeze fails means that it fails to squeeze the shorts of the hedge fund, which is the one that will be coughing up billions to pay all the retailers. So yes, the retailers that are buying shares at higher prices will indeed lose actual real money if the short squeeze fails. And it will be due to what is likely to be market manipulation (ie screwing over its clients) by Robinhood
Scenario 1:
1. Client buys share for $400
2. Hedge funds get short squeezed (because trading is not restricted by Robinhood)
3. Stock shoots up to $1000. Client made $600
Scenario 2:
1. Client buys share for $400
2. Robinhood restricts buying the shares (so the short squeeze doesn't happen)
3. Shares plunge to $50 because the short squeeze failed to happen (ie the hedge fund did not have to purchase the shares at higher prices, which is where the capital that the traders would share amongst themselves would come from)
4. Client lost $350
comboy is saying that the lottery ticket buyer is being kept from participating in a winning strat, which is what's happening to retail investors right now, which is the same thing you outlined. You're both saying the same thing. Not downvoting you btw.
it's not the same because many retailers do lose money because the short squeeze fails to execute. They dont just not make money, they buy shares for $300 and have to sell them for $100
Yes, they are forced to sell and other robinhood users could not buy. It means they allowed selling and restricted buying that will eventually make stock goes down because no other person even if they want to can't buy.
So the market price which is made from all transactions from all brokers will drop because robinhood users could not buy.
That makes no sense to me. If they really wanted to buy they could use another broker? If the market really is dropping then tough luck. You can lose all your money investing in the stock market. If you're leveraged you can lose even more (which might explain why some accounts were closed).
Robinhood, apart from holding a big chunk of the market, were not the only brokers freezing buys on GME, AMC and others -- Trading 212, eToro, CashApp, and more I forgot by now froze it as well. Your only options were "non-app" brokers, like a bank stock portfolio, which no one could really open on the same day.
I think you are naive and don’t know what’s happening. GME is emotional and hype play. They got so much coverage and all the retail people were driving prices up have robinhood platform.
You cannot open the account within same day even if people wantto buy. Robinhood played with people physchology. After seeing the price drop everyone wanted take profits out because even if people want to buy they couldnot.
It was logical short squeeze which could drive price of GME significantly up but due robinhood manipulation it stopped.
I disagree. They've offer a way to trade like other platforms. Other platforms did the same thing and blocked trading.
The question you need to be asking is why did they ALL block trading?
They're competitors to each other, so why did they make the same decision? Remember that these firms make money on every trade done. They want to take your trades. BUT they have to manage risk. They lose money if the client can't pay. They're there to facilitate but they are taking risk themselves if they provide leverage. They, like banks providing mortgages have to have limits set. If would be unprofessional and irrational to do otherwise. These firms are there to make money in a highly competitive environment. They are professionally run to ensure that they stay in business.
The comments here are of the theme 'RH has screwed us to make money'. No, what they've most likely done is made a decision to take no more risk to ensure that they remain in business. EVERYONE is speculating though. If that's the case these arguments that the clients are somehow being screwed over is really unfair and shows a lack of understanding. Clients need to understand the risks of what they're doing, and need to understand the risks associated with executing via one broker. It's a professional environment and drive by retail unfortunately are mostly unaware of the true risks.
Examples:
1. Traders have multiple brokers to trade via because there are technical issues
2. If something is too good to be true, it probably is.
3. If you're betting against some professionals, you need to ask what they know that you don't. Why are they comfortable taking on the risk. The professionals will try very hard not to be emotional and have more info that a retail customer will.
4. The retail investor need to understand the business model of the brokers. Why are they in business and what are their limits?
I see the real problem here is that it is easy to put a trade on. It is difficult to know how to risk manage it and understand the risks. This squeeze has identified a limit in the market that wasn't considered.
>That makes no sense to me. If they really wanted to buy they could use another broker?
That's assuming you have multiple accounts in brokerages, and multiple other ones also have blocked buys (for example Interactive Brokers).
Market will be dropping if significant number of people who want to buy are unable due to third party actions, that's exactly what's market manipulation.
As I said, stocks are inherently risky and should not open positions thinking you’ll strike it rich overnight; what I am saying is that robinhood swiftly stopped retail price action ( because most retail volume is from RH) which caused the price to plummet. Volume for amc and gme also got split for the day yesterday compared to Tuesday (which can be blamed because other brokers also eventually stopped trading these stocks later in the day).
It takes days to get approved with another broker and transfer money there. As we saw, the damage was already done.
Most retail investors only use Robinhood, why have 2 different brokers?
Yes. Low volume means you can launch a short attack and drop the price because there is nobody capable of buying. I saw my portfolio losing > 50% of equity during the attack.
It looks like deliberate market manipulation by the broker, to their own advantage and apparently also to the advantage of some Hedge Funds with close connections to them.
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.
The people who probably would have lost their money anyways (because they were waiting for more suckers to push the price higher) now have an excuse (other retail buyers couldn't open new positions). People who realized those were the suckers stomached selling while it wasn't as high as yesterday but still astronomical.
The anger at Robinhood reminds me of when the government in Nigeria cracked down on MMM ponzi scheme. People were furious because they all assumrd they wouldn't be the bag holders at the end. But here there's been a full day to close positions so I'm fairly sure the people who aren't doing it now wouldn't have done it whenever the stock starting going down in other circumstances
Except, as SI/Float was at 139%, there was a guaranteed sucker to buy it off them at basically any price - unlike in a Ponzi scheme where you never know if there’s going to be another sucker.
Seems like the 100% line was crossed in Jun 2019 - and it does indeed mean that going long since that point, at almost any price was fundamentally sound investment and not ponzi;
It is a pyramid, but the base layer of “suckers”, those that end up taking the losses in a standard ponzi/pyramid are already determined ; they are the most finance literate people in the market, and they did it willingly. WSB is just adding layers in the middle which is rational.
The short sellers knew their risks perfectly well and did it willingly. They just didn’t expect anyone will figure out how to take advantage of the setup they created.
Well the original shorts claim to have already closed their position and as it went up I think people are probably jumping on that side of the bet as well. Short interest doesn't mean it's going to go up forever this thing is just moving up on ponzi energy not short math
The idea that the shorts are for sure going to pay a higher price is super misleading and is the fuel for this ponzi. Everyone already knows the value of Gamestop is a tiny fraction of its price, so even if some shorts have to close, others will open short positions. To the people who believe they won't be the bag holders because of high short interest, this basically means the stock will always go up, and when enough people realize that's not true, the party is over and the ones opening short positions or closing long positions recently will be the only ones walking away with actual money.
Yes, but that’s not more ponzi than e.g. Snapchat which expected to never make money in its filing. When you buy it, you expect to sell it to a bigger fool, or for a miracle. GameStop is the same; they are both doomed, and will be worth 0 sooner or later unless a miracle happens.
The only reasonable valuation for either is (assets-liabilities), or liquidation value. All other value is based on a belief something will happen. In GameStop, it’s the belief that there are buyers of last resort who would pay almost any price - which is likely true for some of the shorts. Whether it is 1% or 10% or 100% is what these people are betting on.
And the call from industry to pause trading to regroup against Reddit indicates it’s likely a lot more than 1%
