Robinhood CEO GRILLED by Elon Musk Over Gamestop Controversy (Full ClubHouse Interview)

all right well it's full of beans man what happened last week why do you uh stop here why can't people buy the gamestop shares the people demand an answer and they want to know the details and the truth yep yep um [Music] hey guys welcome back so the saga continues guess what elon musk of all people yesterday was able to sit down and talk with the ceo of robin hood vlad whatever his name is and it was really interesting i tell you what if elon wasn't the ceo of spacex and tesla he could very well be an investigative journalist because he actually got much more out of vlad than the media outlets have gotten over the past few days so this is quite a long i'm basically just going to shut up during this this interview i'll add a little bit of thoughts and opinions here and there but really i'm just going to let the interview play out so without further ado let's have a listen and hear vlad's explanation of why robin hood decided to halt trading or hope buying of gamestop when was it last thursday and from there onwards so let's have a listen elon okay uh blood uh can you hear us glad to stop impaler hey guys thanks for uh thanks for inviting me up it's good to hang with all of you all right vlad what really happened give us the inside scoop all right well i was actually hoping that uh you would invite me up for the fermi paradox part because um this has been a very surreal weekend and week for me one of the really great things is all the people coming to coming out of the woodwork to offer support for the company uh offer you know advice so um i got introduced today um and actually i should say i just randomly downloaded clubhouse a couple of days ago just to see what it was all about so this is my first time literally using the app but um yeah i uh i got introduced to uh your friend antonio elon who had some good advice for me and then introduced me to you you had some great advice and then i figured you know i heard about this clubhouse and uh this has got to be part of the simulation so i just uh thought why not so here i am so i'm i'm actually um i'm actually an adherent to the simulation hypothesis all right well it's full of beans man what happened last week why do you uh stop here why can't people buy the gamestop shares the people demand an answer and they want to know the details and the truth yep yep um okay so let me let me start by giving a little bit of background um so i'm the chief executive of robin hood we know actually i'll go through this quickly don't worry this is this is uh this is important it's actually a couple of companies so there's a an introducing broker-dealer called robinhood financial and that basically is the app that you uh know and love it processes trades uh you're a customer of robinhood financial then there's a clearing broker dealer um robinhood securities that clears and settles the trades and then we have robin hood crypto um which is our crypto business all of which all of these are kind of different entities that are differently operated so basically wednesday of last week we just had you know unprecedented volume unprecedented load on the system uh a lot of these you know so-called meme stocks were um you know going viral on social media and people were um people were joining robin hood and there was a lot of net buy activity on them um as you guys all know and robinhood at this time i think was number one on the ios app store um and uh pretty close if not number one on on google play as well so just unprecedented activity um and so thursday morning right um so i'm i'm sleeping uh but at 3 30 a.m pacific um our operations team receives a file from the nscc which is the national securities clearing corporation so basically as a broker as a clearing broker and this is where robinhood securities comes in we have to put up money to the nscc based on some factors including things like the volatility of the of the trading activity concentration into certain securities um and this is this is the equities business so it's based on stock trading and uh not options trading or anything else um so they gave us a file with a deposit and the the request was around three billion dollars which is you know about an order of magnitude more than what it typically is right so three billion dollars almost an order of magnitude more than normal so for those that don't know an order of magnitude i had to look this up is 10x so normally the deposit would be about 300 million today or this this day they're asking three billion dollars which is just insane and this is money that robin hood has to hand over and as vlad's about to talk about this is actually more money so in robin hood's life the total amount of money that they've raised is about two billion dollars so it's more money than robin hood has ever raised in the history of their company which is pretty insane anyway let's continue so um no no why is that so high like this seems like like it sounds like this is an unprecedented increase in uh demand for capital um what formula did they use to calculate that well um yeah and just to give context you know robin hood up until that point has raised uh you know a little bit around two billion dollars in total uh venture capital up until now so it's a big number like three billion dollars is um is a large number right so um basically the and you know i the details are we don't have the full details it's a little bit of an opaque formula but there's a component called the var of it which is value at risk and that's based on kind of some fairly quantitative things although it's not it's not fully transparent so there are ways to reverse engineer it but it's not kind of publicly shared and then there's a special component which is discretionary so that's that kind of acts as a multiplier and um basically discretionary discretionary meaning like it's just their opinion yeah they're uh it's it's a little bit i mean i'm sure there's there's definitely more more than just their opinion but um basically i mean i i guess like it's based on growth everyone wants to know what everyone wants to know is like did something maybe shady go down here like like it's like it seems weird that you'd get a sudden 10 billion dollar demand you know three billion in the morning sorry how much yeah it was three billion us dollars okay three billion around you know just suddenly out of nowhere um and uh what i wouldn't impute shadiness to it or anything like that and actually you know the nstc was reasonable subsequent to this and you know they've been they've been uh they worked with us to um to actually lower it so um it was unprecedented activity you know we don't i don't have the full context about um you know what was what was going on in what's going on in the in the nscc to make these calculations but um yeah essentially is anyone with a large i'm holding you hostage right now no no i'm okay yeah um thanks for asking but anyway so this was uh this was obviously nerve-wracking and i actually was asleep at this point you know the operations team was uh was fielding this at three o'clock and then um you know we got back we put our heads together um you know our chief operating officer basically said look let's call up the higher-ups at the nscc and kind of figure out what's going on maybe there's some way we can work with them and basically there was another call and they lowered it to something like 1.4 billion dollars from three so okay we're making some progress right and then but it's still a high number so essentially vlad here is saying that there's kind of room to move and it's not just a hard formulaic number that gets spat out at them which i find is really strange i would have thought it would be a little bit more you know this is the amount based on this this this and this it seems like there's a lot of subjectivity behind it so i don't quite understand how it all works i'll be the first to put my hand up and admit that but pretty insane it went from three billion dollars to almost half of that so that seems pretty wild but anyway let's continue and then um we basically proposed well let's let's explain how we plan to um let's explain how you know we'll manage risk in these symbols throughout the day uh we proposed um marking these volatile stocks that were kind of driving driving the activity position closing only and then um at about uh an hour before market clo market open so 5 30 or 5 in the morning they came back and they said okay uh the charge is or the deposit 700 million which we then deposited and paid promptly and then um everything was fine um so that that essentially explains why we had to um we had to mark these symbols position closing only and also why you know we didn't want to we knew this was a bad outcome for customers um you know part of what's been really difficult is um robinhood stands for you know democratizing access to stocks and yeah we want we want to give people the access so that's been very very challenging um but we had no choice in this case we had to conform to our regulatory capital requirements and so the team did did what they could to make sure we were available for customers so once they told the clearinghouse that they were only going to let users uh sell gme and not buy the deposit requirement went from well first of all 3 billion and then it went down to 1.4 billion and then down to 700 million this is insane i wish i knew exactly how they come up with these numbers and if you do know if you know this area in depth please explain it to me let me know down in the comment section below how do the clearinghouses actually come up with the deposit requirements but i'd be really interested to know anyway pretty insane that it went from 3 billion and eventually by all the steps that robin has said what if we do this what if we do this it got down to 1.4 and then 700 million so wow anyway back at it who controls this this organization this clearinghouse um you know it's a it's a consortium it's not it's not quite a government agency um you know i i don't really know the details of of uh of all of that okay but you know and to be fair like we were we were uh i think there was legitimate sort of turmoil in the markets like these are unprecedented events with these meme stocks and you know there was a lot of activity so there probably is um some amount of extra risk in the system that warrants higher higher requirements so it's not entirely unreasonable but we did operational processes to make sure that customers that had positions could sell their open positions because obviously restricting someone we got a lot of questions about okay you had to restrict buying why didn't you also restrict selling and the fact of the matter is people get really pissed off if they're holding stock and they want to sell it and they can't right so i think that's that's categorically worse so um and lots of other brokers i think were in the same situation robinhood was in the news but you you sort of heard this industry-wide right other brokers uh basically restricted the same exact activity all right so it sounds like this this organization should you know calls you up and they basically have a gun to your head either either hand over this money or or else um and so because i mean like basically what people are wondering is like did you sell your clients down the river or do you have no choice if you had no choice that's understandable but then you know we got to find out why you had no choice and who are these people that are saying you have no choice yeah um i think that's fair you know we have to comply with these requirements financial institutions have requirements um you know the the the formula behind these requirements um i think um it would obviously be ideal if there was a little bit more transparency so we could plan better around that um you know but to be fair we were able to open and serve our customers and um you know 24 24 hours later um our team raised over a billion dollars in capital so that when we when we did open uh well when we do open tomorrow morning uh we'll be able to kind of relax the stringent position limits that we put on these securities on friday will it be any limits well i think there's always going to be some theoretical limit like we don't have infinite capital right and on friday there were limits um so there's always there's always going to have to be some limit i think the question is you know will the limits be high enough to the point where you know some they won't impact you know 99.9 plus percent of customers um so if you know someone were to deposit a hundred billion dollars and and decide to trade in one stock like that that wouldn't be possible you know so this makes sense obviously there is going to be some limit to how much one or users just in general can trade a particular stock based on these deposit requirements and how much money robin hood has to hand over as you know for these deposits but i think vlad he recognizes the important issue here is to try and make sure that although there is a limit you know 99.9 of robin hood users just don't feel that limit right so it almost feels as though there is no limit to most users most users their experience is not interrupted by any sort of limit that's going to be the balance that robinhood is going to have to make they're going to have to meet these clearinghouse deposits without putting their business at risk okay so obviously robin hood itself doesn't want to put their you know their business um at risk of bankruptcy but they also have to try and find the right line where you know users don't feel like they're being restricted in what they can do because you know reality is with robin hood the platform itself mostly retail users are using it obviously so generally speaking you wouldn't expect me people to be trading millions of dollars on robin hood at once usually for most users i would imagine it would be like perhaps just say for example it's like a maximum most users there's a maximum of ten thousand dollars that they've put into their trading accounts so for robinhood if you can set that limit to trading at you know ten thousand dollars for you know gme stock for example then you know 99.9 of your you know your users aren't going to feel that limit and that's really important that's the line that they're going to have to find so the user experience is not limited and people don't feel like they're limited where when in reality there is always some limit anyway that was pretty long for me let's get back into the action all right well i guess people really just want to know you know if you had no choice then then you had no choice uh gun for that situation um and you know then that's understandable uh but then whoever put that gun to your head should you know be willing to answer to the public yeah listen and uh you know i know there's there's processes this is unprecedented times and to be fair to those guys they've been reasonable so um we are i think the the one thing that is maybe not clear to people is robin is a participant in the financial system um so we have to work with all of these counterparties so we do get a lot of questions about you know why do you work with market makers why do you work with clearing houses uh vertically integrating and getting um i mean it's hard enough to build a introducing a clearing broker dealer not too many people have done that but the financial system that allows customers to trade shares um is sort of a complex web of multiple parties and um you know it's it's hard to everyone says it could be better it could be improved um it's it's just the necessity of of trading equities in the us that you have to do all these things i mean to what degree are you beholden to citadel i mean like basically if citadel's unhappy then i but then what happened yeah so that you know there was a rumor that um citadel uh or other market makers kind of pressured us into doing this and now that's just false right um market makers execute our trades they execute trades of of every broker dealer um you know this was this was a clearing house this was a clearing house decision and it was just based on the capital requirements so um from our perspective you know citadel and other market makers um weren't involved in that so that's the meat right there that's your job now is to go back over that little bit about citadel and you come to your own conclusion as to whether you think vlad is telling the truth because for those that don't know the backstory so citadel is a hedge fund that was short game stop and they also are big investors in melvin capital in fact they're one of the two entities that just bailed out melvin capital to the tune of like 2.75 billion dollars i think it was so they have an interest their investments they have an interest in making sure that gamestop stock doesn't go through the roof because otherwise the shorts get squeezed and it's just a terrible situation for them now here's the thing is that citadel is a hedge fund that buys order flow from robinhood so citadel provides revenue to robinhood so it is rumored and i put that in bold and underlined it is rumored that citadel has flexed their muscle or you know put robin hood under pressure to not allow people to buy gamestop stock because by buying gamestop stock that spikes the share price up people that are short lose even more money that would be citadel and melvin capitals so that is a rumor that's been floating around so your job i think is now to listen to this section of this talk about citadel and come to your own conclusion of whether you think uh vlad is actually telling the truth i before today i'll be honest i thought that he was not telling the truth having heard him explain it in much more detail in literally this interview by elon musk um i actually think that they're i actually i'm starting to believe that story that vlad tells a little bit more but i'd be really interested to hear your opinions on it definitely leave your opinion down in the comment section below what do you think do you think vlad's telling the truth or do you think he's telling little fibs here and there let me know anyway back to it but wouldn't they have a strong say and and who got put in charge of that organization since it's an industry consortium not a government consortium or not a government regulatory agency um i i don't have any reason to believe that i think that's just like you know then you're getting into kind of the conspiracy theories a little bit so i just have no no reason to believe that that's the case you know okay all right um well i guess so we'll see what happens with future actions um hopefully that works insecure and at least a little bit entertaining are you not entertaining so there you go that is the situation and as i was saying before let me know what you think do you think that vlad and robin hood are actually telling the whole truth and nothing but the truth or do you think there's some little half-truths maybe blended into the mix i'd be interested to hear what do you think the truth behind the situation with citadel is vlad was obviously very quick to shoot down that idea and to say nah they're just rumors it's just straight up false what do you think let me know know down in the comment section below it is going to be some time before we actually know the full truth behind this situation but yeah i'd also be interested to hear your thoughts on what do you think about the explanation behind having to limit the trading of gamestop because of the various clearinghouse deposit requirements let me know that stuff down in the comment section below and give this video a thumbs up if you thought that elon musk did actually a really good job at getting information out of vlad he got much much more information out of lad than any media outlet has done over the past few days and i think the reason behind that is that the media companies they want to try and you know they want to try and expose right so they almost come into the interview as an attack on vlad whereas i think elon um and i agree i watched um stephen's video from solving the money problem he brought up this topic as well at the end of his video where he was saying that that elon really came at that interview yes he asked the hard questions but he came at it in kind of a joking kind of informal way which i think actually really helped get more information out of lad and by the way if you haven't watched steven's video then definitely go over to his channel and watch it i'm going to leave it linked up top over here i think it was over here i can't remember it's coming up on the screen right now go and check out his video if you haven't done so already um but that is my take that is my opinion so let me know what you think down in the comment section below leave a like on the video if you did enjoy it or if you found it useful check out profitful down in the description below if you're interested in how i go about my investing but that is it from me for today guys thank you very much for watching and i'll see you guys in the next video [Music] [Applause] [Music] [Applause] [Music] [Applause] you

Channel: New Money

Views: 485,535

Rating: 4.7773457 out of 5

Keywords: stock market, elon musk, short squeeze, elon musk on clubhouse, gamestop stock, robinhood ceo interview, robinhood ceo, elon musk clubhouse, elon musk interview, elon musk vlad, elon musk robinhood, short squeeze gme, vlad, gamestop stock explained, gamestop explained, gamestop short squeeze, gamestop, vlad tenev, vlad elon musk, clubhouse elon musk, clubhouse app, clubhouse elon, clubhouse live, clubhouse elon musk live, clubhouse elon musk vlad, robinhood gamestop

Id: aicDIMtVld8

Length: 25min 5sec (1505 seconds)

Published: Tue Feb 02 2021