It was already posted on Reddit, a way bigger platform than ET. But why would I post it? 1. Maybe RH would recognize the mistake and close the loophole. Generally loopholes like this aren't good for anyone. 2. For fun and giggles. You can't believe just how stupid and bad Robinhood is. 3. So normal traders would leave that shithouse of a brokerage and wouldn't lose their capital when it goes under. 4. So this doesn't happen: And to go further, chances are the trader can not take his money out because RH would claim his gains as fraudulent but would let him take the loss if the trade goes badly.
Gold's Gym (and many others) are not about lifting weights, but about getting rubes to hand over their bank account numbers, SS#, and sign a contract. It's a debtor-generating machine, intended to employ an army of bottom-of-their-class lawyers. They charge $10/month for a membership, auto-billed, and they *know* that any user will consume that much in water/sewer fees should they actually come to the gym. Gold's doesn't care. They know that on average, you will come for a while, you will lapse, you will quit paying, and they will be after you, charging you for who-knows-what on the way to gauging out your eyeballs, for that $10/month lousy "membership." (As an indication, try "quitting" -- it requires a registered letter... "whut?!?") Is Robinhood like that? I don't know. But I'd say it's a coinflip, that in all that paperwork to sign on, there are plenty of "protection" statements and permissions that could be masking their true business model: to generate low-rent legal fees from rubes who didn't read the forms all the way. Can anyone name a trader with a brain who trades through Robinhood? No? Well,............
A “loophole” in terms of obtaining an extreme amount of leverage. If/when the account blows up surely, they will come after the account holder. Even if the account holder is broke, the account holder will continue to owe the amount he/she blew up. A serious risk management flaw on the part of Robinhood, but hardly a loophole?
Yes in principle, but the user could counter sue, stating that Robinhood caters to beginners who don’t understand margin and cannot be responsible for Robinhood bugs and being mislead by what they see on their screen. It’s Robinhood that’s supposed to guide them after enticing them to sign-up with free stock.
As much as Tesla and Apple values have dropped since their products became more expensive than other products.
Just an assumption based on basic knowledge of how those tech companies work. I’m assuming that Robinhood has not lost users and may even still be adding more users, generates solid revenues (though not necessarily profits), plans to roll out more services (like they did crypto and recently planning interest-bearing checking or debit card accounts), and generally still have an opportunity to become one-stop-shop for basic financial services. They also want to become a bank, which may be possible with the support of some of their high-powered investors and partners. Their value may drop at some point, but I just don’t see any signs of serious trouble for them, except for these margin issues that possibly will blow up to bigger proportions at some point. Finally, this is just my lightweight opinion, we could argue both ways but there is no reason to state that their value has dropped or not, without actual facts and news based on further funding.
That wsb reddit is hilarious its composed of people who play options in the worst way possible using robinhoods open margin platform to full effect.
Very specifically my wife, her sister, co-workers and friends. They never tried anything else so Robinhood is all they know. When having technical trouble with Robinhood in the past some of them tried switching to WeBull but were confused by more complex features and charts, so went back to Robinhood. All they look at is the current price of things like FB, AMZN, SPY, and TVIX... Also experimenting with options. They don’t use charts much but simply “feel” whether the price is high or low, based on looking at those prices for several months. Oh, and they do not make money trading. They imagine they’re breaking even by adding more money to their Robinhood account every 6 months.