Speculation moves to silver, but it’s not clear who’s behind it

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Tonight: The latest on the Reddit Rebellion, Tesla’s dirty little secret and the oddest shoe we’ve seen from Nike in a while.

CAN’T STOP GAMESTOP

ICYMI: Last week, a tense showdown played out on Wall Street. It was a David vs. Goliath tale in which a band of amateur investors on Reddit took on Wall Street pros by inflating the share price of GameStop (and other securities).

The mass buying spree led to huge gains for some in the Reddit crowd who got in early. Hedge funds, meanwhile, lost billions of dollars on their short positions.

Here’s the latest in the so-called Reddit Rebellion.

SILVER IS THE NEW GAMESTOP?

It’s investing 101 that you don’t want to buy a stock when it’s peaking. So investors who ostensibly missed the boat last week were hunting for deals elsewhere on Monday. And silver was its name.

On Monday, silver prices jumped 13%, touching an eight-year high. The rally seemed to be linked to WallStreetBets, the Reddit community that initiated the GameStop surge.

But there was disagreement Monday over where the #silversqueeze was coming from. Some posts on WallStreetBets suggested their movement is being co-opted by hedge funds infiltrating the group. My colleague Matt Egan has all the shiny details.  

WHAT’S HAPPENING WITH ROBINHOOD?

The company is trying to assure customers that last week’s trading halt was not a sign of Robinhood bowing to pressure from big firms on Wall Street. The reason was a cash crunch.

Quick primer: When you buy a stock on Robinhood, you might think that it instantly becomes yours when you tap “buy.” But behind the scenes, there’s more going on.

• All trades have to go through a clearinghouse — these are obscure intermediary institutions that mitigate risk between buyers and sellers.
• As the Reddit frenzy grew, it triggered the risk-reduction mechanisms managed by clearinghouses, meaning Robinhood had to find emergency cash to be able to continue executing trades.
• Robinhood’s CEO said the $3 billion ask was “an order of magnitude” larger than what Robinhood is typically required by the National Securities Clearing Corporation to put up. It had to tap its existing investors for a $1 billion cash infusion.
• On Monday, Robinhood raised yet another $2.4 billion from shareholders. The $3.4 billion total is more than the company has raised in its entire existence, according to the Wall Street Journal.

TESLA’S DIRTY SECRET

Tesla sells only electric cars and it’s one of the most valuable US companies in the world

But here’s the thing: The Elon Musk-owned company doesn’t make money selling cars. It makes money selling regulatory credits to other carmakers.

It’s not a very sexy subject, but basically there are 11 states that require automakers sell a certain percentage of zero-emission vehicles. If they can’t meet the requirement, the automakers have to buy regulatory credits from another automaker that does — such as Tesla.

The credit system is meant to encourage electric vehicle production and curb emissions. And it’s become a lucrative business for Tesla — bringing in $3.3 billion over the last five years.

THE BIG PICTURE

Without the credits, Tesla would have reported a net loss in 2020. The $1.6 billion in regulatory credits it received last year far outweighed Tesla’s net income of $721 million.

And even Tesla’s top brass recognize those credits won’t last as more automakers shift to electric. GM, for one, announced last week it would sell only zero-emission vehicles by 2035.

My colleague Chris Isidore reports that the debate over Tesla’s profitability is becoming something of a holy war between the cult-like company’s devotees and its many skeptics.

NUMBER OF THE DAY

$90,879.77

How much would it cost the ultimate Samsung fan if they could spend all they wanted on each of Samsung’s highest-end devices? We did the math. For the top-line phone, watch, tablet, laptop, ear buds, plus all of the sleek home appliances, it’d cost a whopping $90,879.77. We did a similar calculation for Apple fans in December, for the record, and the tally came to nearly $80,000.

JUST CROC IT

If you want the ease of Crocs but not the look — and we mean no offense to Croc devotees here, but come on, you know what they look like — Nike has got a shoe for you.

Go Flyease is Nike’s first pair of lace-less sneakers that can slip on and off without using your hands. And from the video Nike released, it looks a bit more graceful than my usual method of stepping on each heel to pry them off because I can’t be bothered to untie my laces.

Like Levi’s baggy pants and Athleta’s entire clothing line, this shoe is a nod to pandemic comfort. My colleague Jordan Valinksy has more.

WHAT ELSE IS GOING ON?

• Google maps is coming to millions of Ford cars … starting in 2023.
• American jobs won’t return to pre-pandemic levels until 2024, but the broad economy is expected to fully recover by the middle of this year, according to a Congressional Budget Office report issued Monday.
• Prince Harry won “significant damages” in a legal dispute with the Mail on Sunday and the MailOnline.