My bet is the latter. GME exposed how undercapitalized they were given their customers’ leverage and existing investors probably aren’t interested in/can’t agree on terms for injecting more cash themselves.

Probably, you wouldn’t intentionally IPO immediately after a PR disaster unless you had too.

I really really hope the SEC makes them disclose all the gory details of their “payment for order flow” stuff. I mean, basically, smart people who write about it (Levine, patio11), say it’s harmless/helpful. But I don’t think it sits right with anyone. Certainly not with me .

Short story is, they're making money you don't have access to. Exchanges add fees to every trade that goes through an exchange. If a stock costs $10 with a $1 fee, and someone's willing to sell it to you for $10.50 with a $0 fee, wouldn't you take it? That's fifty cents of price improvement over national best offer. So Citadel batches all the orders for that stock and does one big trade (per stock) at the end of the day, and everything settles out -- you got cheaper stock, they made some money for their trouble. Enough money to kick back $0.20 or so to Robinhood for referring you as a client.

> GME exposed how undercapitalized they were...

Or, more accurately, the extreme volatility of GME led to increased collateral requirements that Robinhood couldn't meet. (It was like billions of dollars, iirc.) Or, otherwise, it's not that Robinhood was undercapitalized (or even is undercapitalized!)—just that the goalposts moved suddenly and unexpectedly.

PFOF is still a little squirrel-y. Ditto on Levine and others, and tied up in all that T+2 settlement issue, too.

I think most people would equate "not meeting collateral requirements" to being undercapitalized.

Although it almost never is the specific purpose, it is always also a purpose.

An exit is an exit, a liquidity event is a liquidity event.

De-risking means being able to support your lifestyle no matter what happens, so this does that regardless of whatever quantum states of adversity could lurk behind the scenes.