I don't think that Robinhood had any other choice here. Their partner is Citadel, which is basically a "middleman" broker. Citadels main business is this, for every incoming stock purchase, they buy stock at an amount that is just slightly lower, driving up the stock price a tiny bit, and then sell the stock to the buyer, pocketing the difference. They can do this because they have direct access to the stock market and are fully autonated. Robinhoods access to the stock market is also through Citadel. Citadel also bailed out the Melvin Capital hedge fund earlier this week.
I would imagine that Citadel can simply force one of their partners like Robinhood to do anything by threatening to cut them off from the market entirely.
I think their main goal now is to make sure that the lawsuits and fines they will be hit with will cause them to loose less than a short squeeze in this stock would eventually have.
But all of this is just speculation. I don't actually know anything about the stock market, I started reading about it two days ago. I don't want to "conspire" or anything like that, just my theory.
I don't see how Citadel can force them into that when that will be much more clearly market manipulation.
Though at any rate, I am not convinced Citadel had much of a stake at this point - Melvin had supposedly closed its shorts and the current short sellers were very possibly different actors.
I would imagine that Citadel can simply force one of their partners like Robinhood to do anything by threatening to cut them off from the market entirely.
I think their main goal now is to make sure that the lawsuits and fines they will be hit with will cause them to loose less than a short squeeze in this stock would eventually have.
But all of this is just speculation. I don't actually know anything about the stock market, I started reading about it two days ago. I don't want to "conspire" or anything like that, just my theory.