It’s almost unfathomable how badly Robinhood destroyed its company today. Here’s one that I was thinking about.

1. Most Robinhood accounts automatically come with margin, meaning investors can borrow against the value of the securities in their account. 1/12

2. Most new investors have no idea how margin works.

3. Basically, if you’re not familiar with it, if the amount you’ve borrowed against your stocks becomes too high relative to the value of the stocks you own, the broker will issue a margin call. 2/12

4. That margin call either requires you to deposit more money, or they’ll liquidate part or all of your position to make sure you can pay back the money you borrowed, which they may have also borrowed from another bank in order to fund your margin account. 3/12

5. So when Robinhood decided to prevent users from buying GME or open GME calls that expire tomorrow, they effectively zapped a shitload of buying power, which is part of the reason why the bottom has fallen out multiple times today. 4/12

6. We’re seeing pictures of users that are having forced liquidations, because - you guessed it - they’re facing MARGIN CALLS and they don’t know what they are because Robinhood doesn’t do a good job of teaching new investors about what margin is and how it works. 5/12

7. So basically, it seems like Robinhood was getting nervous about regulation and potentially being on the hook for a growing balance of margin, and by restricting these buys, they may have actually triggered the very margin calls that their users are so pissed about. 6/12

8. Now, they may have just not wanted the situation to get worse, but at this point it’s pretty clear that their investor education is horrible at best, and in creating a platform that made trading a game, they built the tools that led them to this point. 7/12

9. But I can’t get over the fact that in trying to rectify the situation, their only option was to effectively tank most popular stock on their platform and force liquidations of it to cover borrowed money, driving the price lower, and forcing more liquidations. 8/12

10. But now because of forced liquidations and preventing people from buying GME, Robinhood has effectively angered its userbase so significantly that I don’t know if they recover from this. 9/12

11. When the premise of your company is democratizing stocks and markets for everyone, you can’t go back on that. That’s the one thing you have to provide. No one goes to McDonalds for healthy meals. We for fast, cheap food that feels good but is unhealthy. We know this. 10/12

12. So if you promise free trading and access to markets and democratization, and then you don’t deliver it because you’re nervous about building a margin bubble that your users can’t pay and you can’t pay, you’ve effectively built your own prison because you can’t go back. 11/12

11. They basically built a no-win scenario for themselves on over $2B of VC funding for the last 8 years that all led to a scenario where they had to either blow the company up or have it blown up by outside interests. I’ve just never seen anything like it. 12/12