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2 Big Reasons to Avoid Robinhood's Stock

2 Big Reasons to Avoid Robinhood's Stock
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GameStop, Reddit, and Robinhood: The House Always Wins


Photo: Michael M. Santiago/Getty
In early January, GameStop was trading around $18. By close on Wednesday, it had reached $364.15. An intense buzz has formed around the stock thanks to discussion on the Reddit forum WallStreetBets, further enhanced by dominant coverage in the media. At least one hedge fund that was shorting GameStop (betting the price would fall), Melvin Capital, got utterly crushed.
Some cheered the victory of Reddit and Robinhood over Wall Street. But it isn’t so simple.
What is shorting?
This mania started when the WallStreetBets subreddit began writing about some of the most shorted retail stocks. You can bet that the price of a stock will fall by taking on a short position. This requires you to borrow the stock ....

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