That’s when Musk launched into a torrent of questions, a CEO-to-CEO showdown over why the popular trading app had halted trading on the market’s hottest stocks at one point last week.
“Spill the beans, man,” Musk said to Tenev, who the Tesla CEO introduced as “Vlad the stock impaler.” “What happened last week? Why couldn’t people buy the GameStop shares? The people demand answers and they want to know the truth.”
Were more powerful entities, such as regulators, depriving smaller retail investors of a potential payday at the expense of shadowy hedge funds? Was Robinhood partner Citadel Securities responsible for the trading halt?
“Is anyone holding you hostage right now?” Musk asked.
The spontaneous public grilling by Musk came hours before Robinhood was scheduled to resume limited trading Monday after the unprecedented volatility of last week turned the trading app on its head. Customers will be limited to buying one share of stock from GameStop, which is one of eight brands that remain as restricted stocks for Robinhood.
Tenev, who said some of the fears posed by Musk waded into conspiracy theory, explained that Robinhood had received an unusual request around 3:30 a.m. Pacific time on Thursday for a $3 billion deposit request from the company’s clearing agency, which works to fulfill transactions.
That was a problem, Tenev said, because up until that point Robinhood had only raised $2 billion. The amount of interest in the so-called “meme stocks” Tenev referred to had far exceeded what Robinhood could reasonably cover. Tenev said $3 billion was “an order of magnitude other more” than the typical request amount.
But Musk followed up with what’s been on the public’s mind since Robinhood shocked investors by abruptly restricting purchases of GameStop, AMC Entertainment, BlackBerry and certain other volatile stocks: “Did you sell your clients down the river or did you have no choice?”
“If you had no choice, that’s understandable, but then we got to find out why you have no choice,” Musk said. “And who are these people that are saying you have no choice?”
In response, Tenev suggested more transparency was needed in the formulas used by financial institutions to calculate these requirements. He emphasized how Robinhood was able to raise more than $1 billion in capital in 24 hours to reopen on Monday. Tenev would not commit to imposing no restrictions on the stocks.
Musk’s impromptu interview on Clubhouse seemingly opened up a new frontier in the world of web communication. The venue of a Clubhouse room enabled Musk, who became the world’s richest person last month, to summon the news cycle’s most infamous business leader to the front of the room before a public audience to answer for his actions.
In doing so, Tenev expressed regret.
“We knew this was a bad outcome for customers” Tenev said. “People get really pissed off if they’re holding stock and they want to sell it and can’t.”
Musk’s late-night Clubhouse appearance rippled through the exclusive, invite-only platform, as Silicon Valley power players, Tesla and SpaceX devotees and venture capitalists clogged the space. At one point, the app warned, “Our servers are struggling,” and many who could not access the discussion were forced to live-stream it on YouTube.
The conversation was mostly vanilla for the outspoken Musk, but he did weigh in on the country’s struggles to administer coronavirus vaccine quickly enough to as many people as possible. Musk, who promoted misinformation surrounding the virus for months and tested positive before donating $5 million for covid-19 research last month, said “there are too many requirements of who can get a vaccine.”