Sat, 30 Jan 2021 02:09:43 +0000
Robinhood will not collapse like Lehman Brothers or Bear Stearns did in 2008; instead, the company will survive the GameStop crisis and successfully get through this period of stress.
“And they will not be they will get through this.” View on YouTube
Robinhood survived the GameStop-related liquidity crisis, raising over $3 billion in emergency funding, and continued operating, later going public in an IPO in July 2021.
Robinhood will successfully ride out the GameStop-related turmoil (including the trading restrictions and liquidity issues) and continue operating afterward.
“And this. And they will. I believe Robinhood will ride it out because they throttled the number of people coming to the platform.” View on YouTube
Robinhood rode out the trading-restriction turmoil, secured additional capital, and remained a going concern despite significant reputational and legal fallout.
The GameStop short-squeeze episode will end badly for many of the retail traders buying in at elevated prices; a significant number of them will lose money when the trade unwinds.
“Probably. This is not going to end well. There's no question about that.” View on YouTube
GameStop's share price collapsed from its late-January 2021 squeeze peak (around $483 intraday, $325 close on Jan 27) to under $50 within a few months, meaning most retail traders who bought near the top lost significant money.
From late January 2021 onward, new retail investors who buy into GameStop during the squeeze will likely not beat the hedge funds; instead, the hedge funds will have regrouped and will outperform or outmaneuver late-arriving retail traders on this trade.
“Now anyone who's piling into it, I'd be real careful because I think the hedge funds have regrouped, you know, and, um, you know, the idea that you're going to beat beat them at their own game, you know, when look, I mean, Citadel is executing your trades.” View on YouTube
The picture was mixed: GameStop's price did eventually crash, hurting late-arriving retail buyers as predicted, but the hedge funds shorting the stock did not simply 'regroup' and win either — Melvin Capital lost roughly 53% in January 2021 alone and ultimately shut down in 2022 after continued losses.
Robinhood will face extensive class action litigation over the GameStop trading restrictions, to the point of being sued "into oblivion," with many lawsuits filed seeking recovery of users' implied losses from the restricted trading period.
“I think that what's going to happen is they're going to get sued into oblivion. I think that the class action lawsuits here, when people talk about the implied losses that that they that they had over the last 24 hours, David Sachs is right. You can't undo it.” View on YouTube
Robinhood faced substantial litigation, congressional hearings, and regulatory fines (including a $70 million FINRA penalty and a $65 million SEC settlement), but was not "sued into oblivion"; it survived, went public via IPO in mid-2021, and remains an operating public company.
During the 2020s decade, there will be a broad societal shift toward decentralized systems, including new decentralized ways of trading, communicating, and building, driven in part by backlash against centralized platforms shutting down services (e.g., Parler and Robinhood-style shutdowns).
“and it will force people to decentralize, and it will enable new ways of trading, new ways of communicating, new ways of building. Um, and that's the profound change that I think this decade is going to realize. And we're just seeing it start now.” View on YouTube
The 2020s did see a meaningful broad shift toward decentralized systems, including major growth in DeFi and crypto trading platforms, and the rise of decentralized/federated social protocols (Mastodon, Bluesky's AT Protocol) partly spurred by deplatforming controversies like Parler's.
The early‑2021 GameStop (GME) short‑squeeze episode will ultimately end very badly for participants who buy at inflated prices, with the stock price falling sharply from its squeeze-driven highs rather than remaining sustainably elevated.
“Do I personally think GameStop is overvalued? Yes, of course I think it's going to end very badly.” View on YouTube
GameStop's stock price fell sharply from its squeeze-driven highs in the months following this prediction, confirming the expectation that the rally would not hold.
The Gavin Newsom recall effort in California will succeed in gathering enough valid signatures to qualify for the ballot, resulting in a recall election being held.
“I will tell you, it seems pretty likely that this recall effort is going to get the signatures it needs. So we can kind of put that in the sand, that it's very likely we're going to end up seeing a recall election.” View on YouTube
The Newsom recall effort did gather enough valid signatures to qualify, and a recall election was held on September 14, 2021.