Even IF you are to assume this is a simply speculative "greater fool" scenario Robinhood just ensured through their interference that the last buyers are less likely to profit.
Robinhood's job is not to police transactions it is to process them. That they would do this for a few million $ in potential customer support time is so naïve.
Letting them off the hook for illegal manipulation because "it is a headache" is one of the stupidest arguments I have heard.
It seems classist and doesn't really line up with my concept of the free market.
I agree that it's a problem when "too big to fail" players get away with their shenanigans, but that's a separate problem, and you don't solve that problem by encouraging common folks to gamble away their wealth.
People should be permitted to buy publicly traded corporate assets. Your gambling analogy doesn't apply here. Robinhood saw fit to approve these people for brokerage accounts (and in many cases options trading). They were allowed to walk into the exchange so to speak, up until the point that they found a favorable position that they wanted to keep trading despite elevated volatility.
It's not the government's job to tell one class of people that they cannot participate in asset markets, while repeatedly bailing out a totally different class of people that blunders its role in the very same markets.
Robin Hood is a brokerage. It is totally normal for them to have clients which (unwillingly or, in this case, willingly) have lost money - their customer support should handle this just fine. A lawsuit for allowing normal trading is going to be laughed out of court; this, on the other hand, will not be good for them, no matter how the lawsuit turns out. Not to mention that the SEC will take a nice long look at what happened here.
If customer support overhead would be their actual worry, they could've simply implemented a large checkbox saying "THIS STOCK IS HIGHLY VOLATILE. YOU _WILL_ MOST LIKELY LOOSE YOUR MONEY. Continue at your VERY OWN risk" and be done with it (you might argue this is still somewhat manipulation, but that could've easily been done in good faith).
https://www.reddit.com/r/wallstreetbets/comments/l6omry/an_o...
(1) If you're buying GME today, there's good (~50%?) chance you'll lose most of your money in two weeks. (Of course there's also a decent chance that you'll make out like a bandit, but I'm not worried about that.)
(2) Moreover, if you're buying GME today, there's a very good chance that you're utterly convinced that you'll make a lot of money.
(3) So, in two weeks, with high probability, these people will flood Robinhood's customer support, and something tells me that they won't take "What do you mean? You made your trade entirely on your own, and nobody can guarantee future prices!" as an answer. (Supporting evidence: see today's talk of lawsuit.)
So, given all this, Robinhood is just limiting the amount of headache it'll face when the shit eventually hits the fan. Sound like good business decision to me.