Robinhood shares halted after massive spike, looming short squeeze

Business

New York Post 04 August, 2021 - 10:38am 37 views

What is a meme stock?

Meme stocks are the shares of companies that have seen a recent surge in viral activity, which is usually fuelled by online social media platforms such as Reddit and Twitter. The buzz over a particular stock prompts retail traders to buy the stock with the knowledge that its share price will likely rise. CMC Markets5 Booming Meme Stocks to Watch in 2021

By Lydia Moynihan

Robinhood’s surging shares were repeatedly halted on Wednesday after a massive spike, with some investors speculating that its dizzying rally is being driven by anticipation of a short squeeze.

Moments after the opening bell on Wednesday, the stock climbed as high as $85 — up a staggering 81 percent from Tuesday’s closing price of $46.80 and briefly giving the company a market capitalization of more than $71 billion. That’s pricier than Intercontinental Exchange, which owns the New York Stock Exchange.

Robinhood shares finished the day up 50 percent at $70.39.

The rally marked a stunning turnaround for the stock, which last week had sunk more 10 percent in a disappointing IPO before finishing its first trading session below $35 a share.

Wednesday was the first day that investors can buy put and call options for Robinhood — and some market watchers saw that as the key reason the stock surged higher despite a lack of news. Buying one call option gives traders the option to buy multiple shares of the stock at a certain price, and issuance of those options can push demand for stocks higher.

“The availability of call options is adding to the surging price — exacerbating the hyperbolic move in the stock,” Tim Anderson, managing director at TJM Investments told The Post.

Others think the increased buying could partly be a copycat trade. Controversial stock picker Cathie Wood, who runs Ark Invest, has snatched up millions of HOOD shares during the past few days — and acolytes could be following in her footsteps.

With this week’s dramatic jumps, the app that helped give rise to super-volatile meme stocks like GameStop and AMC has become a meme stock itself. Between Tuesday and Wednesday afternoon, Robinhood was mentioned 1897 times on Reddit’s WallStreetBets forum — compared with just 212 mentions of AMC, according to data from Quiver Quant.

On Tuesday, the HOOD rally was partly led by retail traders – “retail volumes experienced a tenfold increase relative to Monday” according to a report from Vanda Research.

 Every quarter there’s a new meme,” Ihor Dusaniwsky of S3 Partners told The Post. “Robinhood is the summer blockbuster.”

Still, the tremendous volatility has a downside. Institutional investors are paying close attention to retail investors – and many are betting their trades could come crashing down.  

Even as ‘HOOD’ reaches fresh highs, experts say all signs point to Robinhood being one of the most popular targets for short sellers. The stock borrow rate — how much it costs to borrow a stock and short it — is trading at unusually high levels. Typically, the borrow rates to short a stock is 0.5 percent. For Robinhood, the rate is 40 percent to 90 percent, according to S3.

At a 90-percent stock borrow fee, short sellers need HOOD’s stock price to drop more than 7.5 percent over the next month and 22.5 percent over the next three months just to break even.

“It’s extraordinarily rare for rates to be this high,” Dusaniwsky adds. “And that’s only if you can get the shares.”

More comprehensive Robinhood short data is expected in the coming days.

Read full article at New York Post

Miley Cyrus Offers to Help Educate DaBaby Following His Homophobic Rant: 'Knowledge Is Power'

TechSpot 04 August, 2021 - 06:40pm

Miley Cyrus is extending an olive branch to DaBaby.

The singer, 28, shared a message for the rapper on her Instagram, Wednesday, offering him resources to learn more about the LGBTQ+ community following his misinformed homophobic rant at last week's Rolling Loud 2021 festival in Miami.

"As a proud and loyal member of the LGBTQIA+ community, much of my life has been dedicated to encouraging love, acceptance, and open mindedness," she wrote. "The internet can fuel a lot of hate & anger and is the nucleus of cancel culture...but I believe it can also be a place filled with education, conversation, communication, & connection."

She continued, "It's easier to cancel someone than to find forgiveness and compassion in ourselves or take the time to change hearts and minds. There's no more room for division if we want to keep seeing progress! Knowledge is power! I know I still have so much to learn!"

In the caption of her post, Cyrus tagged DaBaby, writing: "check your DMS - would love to talk and see how we can learn from each other and help be part of making a more just and understanding future!"

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DaBaby has been met with a wave of fallout from others in the music industry after his Rolling Loud set included some ignorant remarks about HIV/AIDS and the LGBTQ community. Following the controversy, he was removed from the lineups of Lollapalooza, Governor's Ball and Day N Vegas.

"If you didn't show up today with HIV, AIDS, or any of them deadly sexually transmitted diseases, that'll make you die in two to three weeks, then put your cellphone lighter up," DaBaby told the Florida crowd over the July 24 weekend. "Ladies, if your p---- smell like water, put your cellphone lighter up. Fellas, if you ain't sucking d--- in the parking lot, put your cellphone lighter up."

Elton John responded by dispelling some the harmful misinformation about HIV/AIDS and holding other musicians accountable for responsibly using their platform. "We've been shocked to read about the HIV misinformation and homophobic statements made at a recent DaBaby show," John, 74, wrote in a post, complete with facts from the Elton John AIDS Foundation. "This fuels stigma and discrimination and is the opposite of what our world needs to fight the AIDS epidemic.⁣"

Madonna also used facts to counter DaBaby's controversial statement. "If you're going to make hateful remarks to the LGBTQ+ community about HIV/AIDS then know your facts," the Madame X artist, 62, wrote.

"After decades of hard won scientific research— there are now life saving medicines available to children born with HIV, to people who contract HIV through blood transfusions, dirty needles or exchange of bodily fluids," she continued. "These new ARV's can keep a person with AIDS alive for the rest of their lives!!! AID's [sic] is not transmitted by standing next to someone in a crowd. I want to put my cellphone lighter up and pray for your ignorance, No one dies of AIDS in 2 or 3 weeks anymore. Thank God."

The Blame It on Baby artist has since issued more than one apology for his remarks, writing most recently in a statement Monday that "having people I know publicly working against me — knowing that what I needed was education on these topics and guidance — has been challenging."

"I appreciate the many people who came to me with kindness, who reached out to me privately to offer wisdom, education and resources. That's what I needed and it was received," he continued. "I want to apologize to the LGBTQ+ community for the hurtful and triggering comments I made. Again, I apologize for my misinformed comments about HIV/AIDS and I know education on this is important."

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Robinhood Stock Is Hot for All the Wrong Reasons

Financial Times 04 August, 2021 - 01:51pm

Robinhood shares halted after massive spike, looming short squeeze

The Wall Street Journal 04 August, 2021 - 10:38am

By Lydia Moynihan

Robinhood’s surging shares were repeatedly halted on Wednesday after a massive spike, with some investors speculating that its dizzying rally is being driven by anticipation of a short squeeze.

Moments after the opening bell on Wednesday, the stock climbed as high as $85 — up a staggering 81 percent from Tuesday’s closing price of $46.80 and briefly giving the company a market capitalization of more than $71 billion. That’s pricier than Intercontinental Exchange, which owns the New York Stock Exchange.

Robinhood shares finished the day up 50 percent at $70.39.

The rally marked a stunning turnaround for the stock, which last week had sunk more 10 percent in a disappointing IPO before finishing its first trading session below $35 a share.

Wednesday was the first day that investors can buy put and call options for Robinhood — and some market watchers saw that as the key reason the stock surged higher despite a lack of news. Buying one call option gives traders the option to buy multiple shares of the stock at a certain price, and issuance of those options can push demand for stocks higher.

“The availability of call options is adding to the surging price — exacerbating the hyperbolic move in the stock,” Tim Anderson, managing director at TJM Investments told The Post.

Others think the increased buying could partly be a copycat trade. Controversial stock picker Cathie Wood, who runs Ark Invest, has snatched up millions of HOOD shares during the past few days — and acolytes could be following in her footsteps.

With this week’s dramatic jumps, the app that helped give rise to super-volatile meme stocks like GameStop and AMC has become a meme stock itself. Between Tuesday and Wednesday afternoon, Robinhood was mentioned 1897 times on Reddit’s WallStreetBets forum — compared with just 212 mentions of AMC, according to data from Quiver Quant.

On Tuesday, the HOOD rally was partly led by retail traders – “retail volumes experienced a tenfold increase relative to Monday” according to a report from Vanda Research.

 Every quarter there’s a new meme,” Ihor Dusaniwsky of S3 Partners told The Post. “Robinhood is the summer blockbuster.”

Still, the tremendous volatility has a downside. Institutional investors are paying close attention to retail investors – and many are betting their trades could come crashing down.  

Even as ‘HOOD’ reaches fresh highs, experts say all signs point to Robinhood being one of the most popular targets for short sellers. The stock borrow rate — how much it costs to borrow a stock and short it — is trading at unusually high levels. Typically, the borrow rates to short a stock is 0.5 percent. For Robinhood, the rate is 40 percent to 90 percent, according to S3.

At a 90-percent stock borrow fee, short sellers need HOOD’s stock price to drop more than 7.5 percent over the next month and 22.5 percent over the next three months just to break even.

“It’s extraordinarily rare for rates to be this high,” Dusaniwsky adds. “And that’s only if you can get the shares.”

More comprehensive Robinhood short data is expected in the coming days.

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