Robinhood Lost $57 Million After Glitch Let People Short Stock Meme

Robinhood Lost $57 Million After Glitch Let People Short Stock Meme

  • Robinhood made a “processing error” that left customers short of a stock of memes last year.
  • The error cost the trading app $57 million, the company’s chief financial officer said during a fourth-quarter earnings call.
  • Robinhood shares rose on Thursday after announcing it would buy back shares seized from FTX founder Sam Bankman-Fried.

Robin Hood ended up losing $57 million in a single day after a glitch let its trading app customers temporarily short a stock of memes, according to company executives.

Not very well-known Cosmos HealthThe stock price tripled on Dec. 16 when a 1-to-25 reverse stock split for the healthcare company went into effect.

But the reverse stock split caused problems in Robinhood’s trading app, allowing users to briefly sell more Cosmos shares than they owned to create a temporary short position, the company said in its statement. publication of fourth quarter results on Thursday.

Robinhood covered the shorts using its cash on the same day, suffering a loss of $57 million from the incident. Its users are normally not allowed to sell short.

“A processing error caused us to sell shares short in the market, and although it was detected quickly, it resulted in a loss of $57 million as we repurchased those shares against a price increase of the stock,” Chief Financial Officer Jason Warnick said.

Robinhood’s loss exceeds Cosmos’ current total market capitalization, with the healthcare stock valued at $56 million as of Wednesday’s close.

Robinhood shares rallied further in premarket trading on Thursday, climbing 5.6% to just over $11 after announcing it would buy out a stake held by disgraced FTX founder Sam Bankman-Fried .

Additionally, Robinhood executives will forgo about $500 million in stock-based compensation to help it cut costs.

Shares of the company are up just under 29% year-to-date, outperforming Nasdaq Compoundthat’s 14% gain.

Learn more: Sam Bankman-Fried takes on new FTX bosses in 4-way battle for $450M worth of Robinhood stock

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