MEET KEVIN Interviews ROBINHOOD CEO Vladimir Tenev | Robinhood App Interview

In this video I will go over my thoughts about Meet Kevin interviewing Robinhood app CEO Vladimir Tenev. There were many great questions asked so I am providing my thoughts on them. Kevin asks questions about why did Robinhood close GameStop and AMC stock. How will this brokerages future be? Will Robinhood be able to IPO? What happened when GameStop was restricted? Did Citadel influence this decision? Did Vlad get a call from Joe Biden at the White House? What about the subreddit wallstreetbets? Will there be a lawsuit?
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Original video: https://www.youtube.com/watch?v=Xe4ypG7iNog
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Full transcript:
Hello everyone so recently Meet Kevin did an interview with the CEO of Robinhood Vladimir Tenev. There has been a huge controversy over Robinhood restricting trading of GameStop stock. In this interview Kevin asks some very important questions to Vlad that help clear up some of the rumors and conspiracies. We have a lot to talk about so let's get into it.

The meeting starts out with Kevin asking Vlad about why he halted trading on GME and AMC. Vlad explains that the company did not have the funding to cover the costs of the trades being made. There is formula that no one knows but is used to determine the amount of money that needs to be covered for peoples trades. If that was confusing let me explain a bit. This formula basically considers many factors such as volatility and volume. The more risky a trade looks the higher percentage of the trade the brokerage will have to cover. GME and AMC were extremely volatile and risky so Robinhood had to pay more. Robinhood is a relatively new brokerage and did not have the funds to cover all these options and trades. This is likely because a lot of new users had recently joined Robinhood because of the GameStop hype. Robinhood usually loans you up to $1000 of buying power while you wait for your funds to clear. This along with the large amount of options being taken on GameStop caused the brokerage to pay a lot of money to cover their users trades. This is not a problem for most brokerages because they have much more liquid cash laying arounds than Robinhood. In one day Robinhood raised $3.4 billion to cover their users trades. Still short on cash they allowed limited trading of GME and AMC.

Addressing the fact that Robinhood only allowed Position closing only (PCOing) on GME and AMC Vlad explained that PCOing is a standard Robinhood procedure and the fact that the procedure was used during a period when many users were attempting to buy these certain stocks made it a unique situation. PCOing is a risk management procedure that Robinhood uses when it cannot cover all of the trades being made. So the PCO was due to a lack of funds in the company. Kevin goes on to ask if the company had $10 billion in liquid cash would they still have restricted these stocks and the answer was no. Vlad then goes to say that they are still just a startup company and have no where near the funding of these larger brokerages like fidelity and vanguard.

One of the biggest questions that was asked in this interview was why didn't Vlad originally blame the formula for stopping the trading. When the trading halted Robinhood said it was doing it to protect its users. Vlad later changed this story and revealed that his company was ordered to pay a lot of money that they didn't have and that is why the trading halted. In my opinion he definitely should have said this in the first place instead of basically saying "All of you are idiots so we are going to stop letting you risk your money and save you" which in reality made a lot of people lose a lot of money. His excuse for this was that he was "running on fumes" because of how crazy that day was.

One thing that Vlad said that I thought was pretty good was that he has started to think and evaluate the overall financial systems that are in place for brokerages instead of simply thinking about Robinhood's place in that system. He realizes that Robinhood has the power to drive change and also realizes that the users do not want to be held back by the rules that apply to the overarching systems. Therefore the users want Robinhood to innovate. The company has already broke many of the systems set in place such as being the first ones to allow commission free trading.

Vlad addressed some of the conspiracies that went have been going around saying that he was not contacted by Biden

As of now Robinhood is a private company meaning that they can't get funding from their users. They have to get funding from bigger entities such as Citadel. This will change when the company IPO's. Being a private company means that they have much less funding than if they were a public company so that is one of the reasons for not having the funds to cover the GME and AMC trades.

Видео MEET KEVIN Interviews ROBINHOOD CEO Vladimir Tenev | Robinhood App Interview канала Linden Chasteen