Perhaps the BEST B1G Forum anywhere, here at College Football Fan Site, CFB51!!!

Remember, the way to short stock is this:

• "Borrow" shares from an owner.
• Sell those shares immediately. You now owe the owner who lended you the share that number of shares, not the number of dollars those shares were worth.
• The incentive for the owner of the shares is that you are paying them some sort of fee for being able to borrow their shares. That's where they make their money.
• At some point you have to pay back the borrower, and you have to pay them back in shares, not in dollars. If the shares are worth less than what they were when you sold them, you pocket the difference (minus whatever fee you had to pay for the privilege of borrowing). If the shares are worth more than they were when you sold them, you have to buy them at whatever the current price is to return them.

Where a "short squeeze" occurs is that shorting a stock is essentially a margin trade. If the paper value of the shares is high enough that you trigger how much margin the lender of those shares is willing to grant you, they can give you a margin call and force you to sell the shares.

But for some of these hedge funds, if they can put off their creditors until the stock drops back down to reality, they might not actually have to sell at all, in which case it WON'T cause them to lose a dime. As long as they're still holding the shares, their losses are paper losses.

The large mutual funds (who are probably the lenders of those shares) want to keep that business--lending shares to hedge funds for a fee--more than they want a one-time windfall of a margin call and wiping out their customer base. Especially since those mutual funds know that GameStop isn't worth the current share price, so that if they do get their shares back from the hedge funds they are just going to have to sell them immediately anyway and drive the price right back down.

So Mdot is right--any price drop now is good for the hedge funds. Price drops now can help them hold off their creditors and not be forced into the margin call that puts those PAPER losses into ACTUAL losses.

could it be that Robinhood was simply trying to protect wouldbe Gamestop investors from getting in deeper

in a stock which was artificially inflated

Yes, obviously, any fund invested in shorting Gamestop wants the price to go down.  However, some big funds said they had closed out of Gamestop, so unless they are just lying, the amount of funds invested in shorting Gamestop has gone down.  And anyone buying Gamestop stock now will have less effect on hedge funds but much more effect on people who bought low to sell high. So to simply say Robinhood is doing a favor to hedge funds is too simplistic - anyone buying now is probably losing money, which is also something they might want to avoid. I guess we have that ethics in business thing going on right now.

why

Because it was so extremely shorted. And if they did- why the co-ordinated effort to stop people from buying it? You can literally only sell it on apps like Robinhood, TD Ameritrade, and now WeBull. Which would naturally just do what- manipulate the price down.

Robinhood by the way- has all of it's trades handled by Citadel Securities LLC- a sister company of Citadel LLC- the monstrous hedge fund which just piggybacked off of the GameStop reddit run yesterday and then invested billions of dollars into Melvin Capital- one of the largest hedge funds on Wall Street that got burnt by their extreme and risky short bets.

GameStop stock falls 20%, halted several times after brokers place restrictions on trades (cnbc.com)

as stated earlier this is very common for highly volatile stocks

its not to manipulate the stock but as a cooling off period to protect the investor