KuleshovSequence [he/him]
Not sure why Robinhood is so popular with r/WSB and Chapos. It is definitely one of the sketchier brokers. Take a look at its Wiki page, it’s filled with controversies and outlines some of the less savory business practices they do (ex. selling order information to high frequency traders). They’ve always been a pretty iffy broker.
The reason they blew up in popularity was their low-fee/no-fee stock trading and their user-friendly app. Now no-fee trading is the industry standard, so the only advantage they have is a nice app. Their user interface is user-friendly, but their actual policies are not.
Bailout isn’t really a good term for it. Other billionaires are giving Melvin money in exchange for revenue shares. This isn’t a gift, it’s a purchase. Melvin does a lot of short selling, and has been extremely profitable for the last 6 years. Due to WSB and other investors buying against shorted positions, Melvin is now losing significant amounts of money. Melvin needs money quickly, which means they are more willing to sell revenue shares at a lower price. Billionaires like Steve Cohen see this as a buy-low opportunity. The idea is that Melvin is likely to become profitable again in the future (a decent bet, as WSB will probably not be able to successfully fuck with shorted positions forever). Basically, his hedge fun thinks that it is a profitable decision to invest in this hedge fund.