Robinhood (NASDAQ:HOOD) lost $57 million shorting Cosmos Health Inc. (NASDAQ:COSM) stock due to a ‘processing error’ that caused the company to glitch into shorting the healthcare stock.
“A processing error caused us to sell shares short into the market, and although it was detected quickly, it resulted in a loss of $57 million as we bought back these shares against a rising stock price,” CFO Jason Warnick said.
Robinhood ended up down $57 million in a single day after a glitch let its trading app customers temporarily short a meme stock, according to company executives.
Cosmos Health’s share price tripled on December 16, when a 1-to-25 reverse stock split for the healthcare company went into effect.
But the reverse stock split caused issues 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 fourth-quarter earnings release Thursday.
Executives Forgo $500 Million
The loss suffered by Robinhood tops Cosmos’ current total market capitalization, with the healthcare stock valued at $52 million as of Friday.
Robinhood executives will forgo around $500 million in stock-based compensation to help it cut costs.
Retail investors continue to scrutinize the company after it had colluded with Citadel during the ‘meme stock’ frenzy to halt trades.
Investors speculate Cosmos Health (COSM) may have a short squeeze this year, so Robinhood’s short ‘glitch’ doesn’t look too well in retail’s eyes.
HOOD stock is currently up +23% year-to-date.
Will Robinhood ever win retail back?
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Can Robinhood win back retail? Leave your thoughts below.