CEO Vlad Tenev ran himself out on major media proclaiming Robinhood doesn’t have a liquidity issue. Tenev’s poor performance on CNBC pretty much burned every ounce of goodwill they had built the last few years with their customers literally overnight.
I’m not going to sit here and proclaim I know anything about anything with the complexity of managing brokerage liquidity. Nobody (me) knows nothing, shout out John Bogle. But I do have a brain with three, maybe four, functioning brain cells. And when a guy who has a history of ripping off his customers tells me it’s raining while he pees all over my leg, my spidey-sense is going to start tingling.
On Thursday night when the GME/Robinhood fiasco was peaking, Tenev claimed on CNBC that “there was no liquidity problem” at Robinhood. He then went on to say that they needed to make larger deposits for clearinghouse requirements. OK, makes sense based on the rules in place.
So now let’s go to the tape and consider what actions Robinhood took on Wednesday/Thursday because they didn’t have a liquidity problem:
- Tapped potentially hundreds of millions in their credit lines.
- Begged their investors for another $1 billion.
- Restricted the purchase of 13 different stocks, which then grew to 50 by Friday, because those stocks put pressure on them to maintain even larger deposits at the clearing house.
So there is no liquidity problem, but Robinhood just did 3 things that anyone with a non-smooth brain can see was done because of a liquidity problem.
My brain is an absolute pretzel at this point, so I’m going to go regain my sanity by checking on the price of dogecoin.