Buying stock on margin means buying it partly with borrowed money, normally borrowed from the broker (in this case Robinhood). The maximum amount the broker (or any lender using the shares as collateral) can legally lend the buyer is 50% of the purchase price. So for example if you buy 100 shares of GME at $200/share, for a total purchase price of $20,000, the broker can lend you up to $10,000 so you only have to put up $10,000 of your own money.
Whenever the loan-to-market value goes above 60%, the broker is legally required to sell enough shares to bring the loan-to-market value back to 50%. This regulation was put in place after the stock market crash of 1929, in which many people both wealthy and of ordinary means, were wiped out and the nation was plunged into the Great Depression. The unregulated buying on margin had caused a buying frenzy which had driven stock prices up to many times their actual economic value, and it was wisely determined that a repeat of this scenario needed to be prevented, since it causes tremendous harm to society across the entire wealth-poverty spectrum.
So there's nothing "shitty" about people getting their shares sold automatically, if their margin portfolio with Robinhood has exceeded 60% loan-to-market value. They knew these were the terms of the loan when they took out the loan. A lot of amateur investors are doing a lot of colossally stupid things because they're all excited about the wild claims that they're finally "beating the big guys" and thinking they're going to make loads of money. They're ignoring the eternal wisdom of the saying "If it sounds too good to be true, it probably isn't true."
Buying stock on margin means buying it partly with borrowed money, normally borrowed from the broker (in this case Robinhood). The maximum amount the broker (or any lender using the shares as collateral) can legally lend the buyer is 50% of the purchase price. So for example if you buy 100 shares of GME at $200/share, for a total purchase price of $20,000, the broker can lend you up to $10,000 so you only have to put up $10,000 of your own money.
Whenever the loan-to-market value goes above 60%, the broker is legally required to sell enough shares to bring the loan-to-market value back to 50%. This regulation was put in place after the stock market crash of 1929, in which many people both wealthy and of ordinary means, were wiped out and the nation was plunged into the Great Depression. The unregulated buying on margin had caused a buying frenzy which had driven stock prices up to many times their actual economic value, and it was wisely determined that a repeat of this scenario needed to be prevented, since it causes tremendous harm to society across the entire wealth-poverty spectrum.
So there's nothing "shitty" about people getting their shares sold automatically, if their margin portfolio with Robinhood has exceeded 60% loan-to-market value. They knew these were the terms of the loan when they took out the loan. A lot of amateur investors are doing a lot of colossally stupid things because they're all excited about the wild claims that they're finally "beating the big guys" and thinking they're going to make loads of money. They're ignoring the eternal wisdom of the saying "If it sounds too good to be true, it probably isn't true."