Most likely it's a large long position who is capitulating or being margin called (stopped out) by their broker. I don't think a short seller with that kind of capital would ever chase a steep drop like that.
RH goes down. Minutes later there is a ladder driving the price down $100s. Minutes later someone longs $100M position. Take it how you see it. And agree about the risk.
It could've been one of the many trading desks inside Citadel who saw the news early, through publicly available sources (e.g. the RH website), and put on a short position within a few seconds. So the story about Citadel shorting the top could be be simultaneously true and legal/normal. Definitely needs an investigation though.
Hm, actually Citadel has access to all RH trades before they go in effect as part of their partnership so I guess their traders would know when buys stop coming at the earliest possible time without any breaking of the firewall.
Still, if that's what happened the tweet is still inaccurate and likely made-up for attention
(This comment was originally a reply to "Robinhood makes most of its money selling customer orders (2020)" https://news.ycombinator.com/item?id=25946626, but we've merged it into the main thread.)
• There was 443k shares sold in a single batch at $120 at 11:24:36 AM EST. • There was 347k shares sold in a single batch at $140 at 11:19:09 AM EST.
Someone took a total loss of $300M from the price an hour prior OR that is a $100M short sale.