“You Killed The Little Guy!” – Robinhood’s Vlad Tenev Faces Off Against Dave Portnoy In Tense Interview
ZeroHedge.com
In a face-off sparked by a random Twitter exchange, Robinhood CEO and co-founder Vlad Tenev sat for an interview with Barstool Sports’ Dave Portnoy and was taken to task for Robinhood’s actions during the “meme” stock trading explosion that happened late last month, when shares of GME, AMC and other heavily shorted names exploded higher on a surge in retail interest galvanized by Reddit’s “WallStreetBets” forum.
Portnoy, who has emerged as one of Robinhood’s biggest critics in the aftermath of the trading chaos, didn’t go easy on Tenev – whom Portnoy has previously slammed as a “scumbag” and a “liar” – to explain exactly why he told the press that Robinhood wasn’t suffering from a “liquidity issue” after the brokerage, and other discount brokerages shut off trading in certain stocks. The decision stopped the crowdsourced short-squeeze in its tracks to the benefit of short-selling hedge funds..
In the month or so that has passed since then, Portnoy has insisted that somebody from Robinhood needs to “go to jail”. Tenev, meanwhile, largely brushed aside the animosity after Portnoy opened the livestream by reminding the CEO that “pretty much everyone watching…hates your guts.”
“That’s what I hear,” the heavily-coached Tenev replied, fresh off his Congressional testimony last week. “But look, I’m glad to be on your show and hopefully we can get into it and answer a lot of these questions.”
Much of the roughly 45-minute interview focused on whether Tenev misled the public when he said Robinhood wasn’t struggling with liquidity issues. After a series of prying questions, Portnoy finally got Tenev to explain that while Robinhood wasn’t suffering from a liquidity crisis when it shut off trading, if it hadn’t acted, the firm might not have been able to survive the incident.
After listening to Tenev’s explanation and conceding that he had a “fair point”, Portnoy continued to criticize Tenev’s handling of the company’s response to the crisis, and accused him and Robinhood of intentionally cratering the stock.
“But the way you acted, and I think this is the biggest problem…Robinhood clearly…their marketing, everything about them, “we’re democratizing trading, we’re for the retail trader,” that’s the branding of Robinhood and it clearly worked…Knowing that, when you force people to sell, you only allow them to sell but they can’t buy, you cratered the stock,” insisting Robinhood should have just frozen its trading and instead “manipulated” GameStop’s stock price. “Look, I get it,” Tenev said. “We didn’t want to do this. We had to act very quickly to make sure that this didn’t become a bigger problem. Everything Robinhood stands for letting people trade and giving people access and raised the capital [inaudible] as fast as we could.”
After weeks of doubling down on his early insistence that Robinhood wasn’t suffering from a “liquidity issue”, Tenev explained that “the ‘L’ word is a big thing in financial services…a ‘liquidity issue’ means you can’t meet your deposit requirements, you can’t meet your margin requirements and are basically dead.”
Furthermore, Tenev explained that if he hadn’t acted, the company might have been facing a serious liquidity issue, Tenev vowed to Portnoy that he would do everything he could to make sure “we don’t see this happen again.” But Portnoy, apparently unsatisfied with this guarantee, pushed back:
“We support the little guy, we’re all about that,” Tenev said.
“You did something and gave a huge advantage to the big guy. That is the exact opposite of helping the little guy. You killed the little guy,” Portnoy pushed back.
“How could that be possible?…you guys are billed as a firm to retail traders and you screwed them over! I mean, you protected the firm and that’s what you did…but if you wanted to protect the customers, you wouldn’t have stopped buying. That decision basically had to crater the price and left a ton of your customers holding the bag.”
The Robinhood founder also swore that his firm didn’t collude with hedge funds like Citadel (Robinhood’s biggest client) to influence trading in the stocks. When Tenev testified before Congress late last week, several other major players, including Citadel founder Ken Griffin and Melvin Capital founder Gabe Plotkin.
Pressed once again, Tenev explained that if he hadn’t acted, it could have hurt RH’s ability to operate, and potentially impacted the broader financial system.
“I understand how you feel that way and how customers might feel that way,” Tenev responded, “But customers buying meme stocks rests on the foundation of our business being able to operate, which rests on a foundation of the financial system working, right? If the financial system breaks down, things could go south really, really quickly.”
The interview ended with Portnoy doubling down on his hostile tone, reiterating that Robinhood had lost his business for good. “I’m not going to say good luck because I’m not wishing you good luck. But I appreciate you coming on.” Tenev replied that “you have my word” that Robinhood will “keep getting better and better.”
Watch the highlights from the interview below…
…or the full interview here.