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Robinhood gets their revenue from margin interest lending to people who can't afford to invest but do it anyways. And also from selling the trading data to high
by fizzledbits 9y ago
Robinhood gets their revenue from margin interest lending to people who can't afford to invest but do it anyways. And also from selling the trading data to high frequency traders to front-run the Robinhood traders. The top guys at Robinhood all have HFT background and connections.
Their pr message is priceless but a sham. The users are the real product, with all that we know goes with that.
- jldugger 9y agoIs any of this a concern for someone looking for a place to follow a simple passive investing strategy in SP500 / AGG?
- fizzledbits 9y agoI was commenting on their business model. I don’t know if the person you described would have anything to worry about, apart from their own moral feeling about the company in general. I won’t use them, because I dislike the entire premise.
- defertoreptar 9y agoDon't forget that huge pile of deposits sitting in user accounts. Banks at least pay interest for those deposits. To be fair, the other brokerages probably do the same exact thing and get $7 on trades.
- godzillabrennus 9y agoSounds like they engineered a fantastic business model. Am I wrong? Is there downside for the typical consumer in all of this?
- fullshark 9y agoDownside is greedy and ignorant investors adding debt and going bankrupt based on unforeseen market movements.
- Judson 9y agoI thought they stopped selling order flow, but was wrong. For those interested, here is their Q4 2017 606 Filing w/ the SEC: https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal/RHF%20PFO%20Disclosure.pdf https://d2ue93q3u507c2.cloudfront.net/assets/robinhood/legal...
- mrlala 9y ago>And also from selling the trading data to high frequency traders to front-run the Robinhood traders. Where's your source on this because that is blatantly illegal- so I don't believe you.