Robin Hood is in the news this week because Robinhood the online “free commission and investing app” is in the news because a group of redditors got one over on big hedge funds looking to short the stock. For the uninformed this article has a great explanation of what shorting a stock is.
One of my favorite animated Disney movies is the 1973 version of Robin Hood where all the characters are animals. There is a running dialogue if Robin is a good guy or bad guy and at one point Robin says “Rob? That’s a naughty word. We never rob! We just…sort of borrow a bit from those that can afford it.” Given the current situation it seems this question is true for Robinhood the app. Is it a good thing or bad thing.
On one hand, it has allowed young investors get into the game without high commission fees on trades. This became the platform of choice for users of the sub reddit r/WallStreeBets to purchase Game Stop stock and drive up the price thus screwing up the hedge funds who were shorting the stock. On the other hand, as the price of Game Stop stock soared, Robinhood attempted to halt the speculation by first stopping all trades and then only allowing their user to sell the stock which once again benefited the hedge fund investors.
So is Robinhood (the app) the good guy or the bad guy?
I don’t really understand stocks & shares & all that investment stuff. So often it’s only the big guys who benefit from all the wealth so it’s good to hear the little guys got one over them.
Yes if I was good at investing I would have bought out your little cartoon 🙂
Nice cartoon. I’ve been reading a good number of stories about this on the business site CNBC. Very interesting story. A few big hedge funds were hit hard. Like a billion dollars hard. Now those guys should have known that the volume of shorting on GME was really high. We will soon hear about individuals jumping on this reddit group’s idea TOO late and therefore suffering big losses. What I understand about the Gamestop company is their revenue and growth potential doesn’t come close to matching what the recent share prices would indicate. It’s a bubble that going to pop. Watch out.
I just saw a guy who spent his tuition to buy GME with $25000 and now it is down $4000 and he is panicking asking if he should sell. Feel bad for him.
I always miss out on those kind of opportunities where a stock goes up so much in such a short period of time.