- Elon Musk roasts Robinhood CEO, Vladimir Tenev, over GameStop.
- Musk questions whether Tenev was forced to make the controversial decision.
- Tenev continues to double down on his decision despite fierce backlash.
Trading app Robinhood and its CEO have gone from beloved to hated overnight. Both have come under fire as backlash over freezing GameStop trading this past week. Before the fallout, retail investors had celebrated Robinhood for democratizing investing.
Elon Musk took over to Clubhouse to interview Vladimir Tenev, Robinhood’s CEO, to get some answers. Musk along with most Robinhood users wanted to know why the app stopped trading meme stocks.
Meme stock is the moniker for stocks that have been recently pumped thanks to social media. GameStop is one such meme stock that received the WallStreetBets (WBS) treatment on social media. Some hedge funds were heavily shorting GameStop stock. As a result, WBS led retail investors to buy the stock forcing a short squeeze on the hedge funds.
However, Tenev claimed that the GameStop limits were part of larger negotiations with the National Securities Clearing Corporation (NSCC). The NSCC had asked Tenev to pay $3 billion in capital to clear trades. This was about 10 times more than the usual amount. As part of talks, Tenev offered to restrict GameStop, thus bringing the amount asked for down to $700,000.
This admission made Musk question Tenev about whether he had a choice in making the deal or not. Further, Musk went on to say that by doing this, Tenev had betrayed his customers. Tenev, however, stood his ground insisting that he voluntarily made the decision to reduce the NSCC fee.
Many retail investors have accused Tenev of market manipulation for his actions against GameStop. Based on the interview, Musk seems to share the sentiment. In the end, only time will tell if Robinhood will be able to regain its users’ trust.