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Robinhood raises $323M at a $7.6B valuation
- swampthinker 7y agoBrings their total to $828M raised since 2013. I'm honestly surprised they haven't taken money from the Vision Fund yet.
- dopamean 7y agothat'll be for when they raise a billion and a 20 billion valuation
- QuackingJimbo 7y agoRobinhood is a predatory lending scheme. The vast majority of its users should not be trading anything other than indexes.
- iscrewyou 7y agoI have a couple of shares on the app for a company. Just for anecdotal data. It’s fun to see. I would never put large amounts of my money in there.
- QuackingJimbo 7y agoGood for you. (Not sarcasm —- this is what individual stock investing should be for retail. For fun, to have a tiny bit of skin in the game.) But many people let it get out of control, either because they lack this self discpline, or because they randomly see positive results and then think they’re good traders.
- filoleg 7y agoThose people can freely lose all of their money through a lack of self-control with any other brokers as well. Just because Robinhood has a good UI/UX that makes it easy to navigate doesn’t really qualify it as “predatory” or puts it at fault more than any other brokerage service.
- levosmetalo 7y agoCare to elaborate? I was under the impression that Indexes are treated the same way as stocks.
- QuackingJimbo 7y agoAmateur investors are best off buying indexes and holding forever. Robinhood entices them to trade in and out of individual stocks (or worse).
- mrep 7y ago> Amateur investors are best off buying indexes and holding forever. And you can do so on robinhood by buying ETFs while potentially saving money on transaction fees if you were to use a traditional brokerage (I say potentially because vanguard lets me buy their etfs without a transaction fee when I use their brokerage account).
- AznHisoka 7y agoCan't you say the same thing about everyone using any other retail brokerage?
- QuackingJimbo 7y agoNo. Upstanding retail brokerages (such as Interactive Brokers) don’t make interest on their customers’ balances.
- notyourday 7y agoHuh? That's just not how this works. There's always a spread between the cash interest that the custodial firm gets on the balances it holds and the interest it pays to the customers.
- usmannk 7y agoWoah that is totally untrue. Brokerages make a lot of money by investing your balance. In particular, IB makes 49% of its revenue this way. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
- benj111 7y agoInteractive Brokers makes 49% of revenues from customer balances. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
- Youden 7y agoTo add an even clearer source to the other replies: https://www.interactivebrokers.com/en/index.php?f=1595 https://www.interactivebrokers.com/en/index.php?f=1595 IB is abundantly clear that it makes money from cash balances. I'm not sure where you got this idea from.
- gtfratteus 7y agoAssuming that's true, how would that make RobinHood a predatory lending scheme?
- benj111 7y agoLending? What makes them worse than than anyone that charges a fee?
- QuackingJimbo 7y agoThe ones who charge a fee don’t make interest on your balances.
- benj111 7y agoYes they do. " 57% of Schwab’s revenues are from net interest" https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
- pertymcpert 7y agoNo, no, no.
- almost_usual 7y agoIt's everyone's right to shoot themselves in the foot with dumb financial decisions. Robinhood isn't doing anything egregious here, they're only reducing friction and fees. I've used the app sparingly in the past with "fun money" but haven't done serious investing with it.
- elliekelly 7y ago> It's everyone's right to shoot themselves in the foot with dumb financial decisions. The industry regulations would indicate otherwise. Generally, the “dumber” the money, the more regulatory protections that will apply. At their core, financial regulators are consumer protection entities.
- almost_usual 7y agoNothing is stopping anyone from putting their life savings into a legal dumb investment. Regulators and the government sure won't stop you from liquidating your 401k early. At some point common sense comes into play and you need to be smart with your money.
- mywittyname 7y agoThe US SEC has accredited investor requirements specifically to keep people from being fooled into making "dumb" investments.
- almost_usual 7y ago>US SEC has accredited investor requirements specifically to keep people from being fooled into making "dumb" investments What stops me from liquidating my 401k and investing all of my money into a company that misses their earning goals this week? Where does the US SEC come into play here?
- deleted 7y ago[deleted]
- zinclozenge 7y agoThey make it abundantly clear that options are risky.
- paxys 7y agoSo Robinhood is now loaning money to helpless people at exorbitant interest rates? Or did you just make up a new definition for "predatory lending"?
- AznHisoka 7y agoI've been using Robinhood for the past year, and I hope they add basic features such as: - The ability to short a stock, which I still can't believe isn't available. - Price Alerts Everything else is gravy, IMO, especially if they keep the same basic, sleek interface, which I actually like.
- throwaway5752 7y agoIs there a way to allow shorts without having to manage margin and having to carry risk on the balance sheet? They have to deal with two counterparties (you, and whomever is lending you the shares). I am not sure how they could economically offer free short trades.
- stephengoodwin 7y agoNot that I'm aware of. The only alternative would be to permit shorting if the user has a Long Put for defined risk protection. You could always to a synthetic short through buying a Long Put, but time (and often volatility) decay become a factor (for shorter term trades).
- stephengoodwin 7y agoCorrection: Should be Long Call for the first scenario: defined risk protection (for shorting), not Long Put.
- tim333 7y agoYou'd probably have to charge something like a borrowing cost. There isn't really a risk free way to do it - if you short a stock and it goes up 100x then there's a liability there and if the customer can't pay up then the broker is stuck with it.
- hakanito 7y agoOn BitMEX you can make leveraged short/long bitcoin trades without the downside of owing more than you put in. Max you can lose is 100%. It’s powered by a purpose-built stoploss liquidation engine
- mattferderer 7y agoI'm curious if anyone with knowledge can speak to how Robinhood sells data to high frequency traders? This seems to result in a large percentage of their revenue which of course makes sense due to not having commission revenue. I've also heard some people argue if you're investing a decent amount, you're better off with commissions over market orders on Robinhood. The arguments were the above & that orders can take a much longer time to process. Though I imagine most small investors are not to concerned with either.
- deleted 7y ago[deleted]
- benj111 7y agoIts market makers generally rather than HFT. Essentially they (market makers) agree to buy stock that you want to sell than they sell it to someone else. Problem is if the market moves against them, you could be a hedge fund manager that knows something they don't. Robin hood customers don't really know anything, their trading is fairly random, so a market maker can be confident that if they buy the shares, the Robin hood customer doesn't know something they don't, that is worth something to them, and allows them to offer tighter spreads.
- gringoDan 7y agoThis is a great article from patio11 that explains the general process, though not for Robinhood specifically: https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ https://www.kalzumeus.com/2019/6/26/how-brokerages-make-mone...
- claytonjy 7y agoI'll add Matt Levine's insightful take here [0], which delves a bit into the "deal for order flow" controversy, and also makes the unique claim that for Robinhood to engage in this is very much in line with "taking from the rich and giving to the poor", because it does guarantee price improvement for RH users. [0] https://www.bloomberg.com/opinion/articles/2018-10-16/carl-icahn-wants-to-fight-dell-again https://www.bloomberg.com/opinion/articles/2018-10-16/carl-i...
- dang 7y agoUrl changed from https://www.theblockcrypto.com/tiny/robinhood-raises-valuation-to-7-6-billion-receives-323-million-in-funding/ https://www.theblockcrypto.com/tiny/robinhood-raises-valuati..., which points to this.
- deleted 7y ago[deleted]
- gigatexal 7y agoThis is great! Now I wish they would open up trading for IRAs
- elamje 7y agoI am confident that everyone’s IRA would be better kept by Acorns. Robinhood encourages getting in and out of positions to frequently.
- MuffinFlavored 7y agoI'm confident that everyone's IRA would be better kept in a low-cost mutual fund that tracks a popular index.
- elamje 7y agoThat’s exactly what Acorns does. Only uses Vangaurd popular indexes.
- MuffinFlavored 7y agobut they charge a fee on top :) it's small, but it basically abstracts away the underlying investment vehicles. it causes Acorns to be a blackbox. "welp, I don't know where my money is going, it's just going into the Acorns! They handle it all for me!"
- elamje 7y agoI don’t mind it. Personally I find that it gives an incredible amount of dollar cost averaging, since as little as $5 gets invested at a time. All transaction fees are included with the $1-$2 a month. Additionally it’s not a black box because you get to select from 5 options that explicitly show the exact allocation and which ETF it goes to. To each his own, but I find that it takes away a lot of the psychological thought of investing in a cost effective way. But the $1-2 a month can end up being a large fee if you don’t have more than $10 or $20k invested.
- SergeAx 7y agoDST Global is a pocket of Russian oligarch Alisher Usmanov, alleged criminal, Putin's sidekick, owner of Russian social network VK, which committed numerous acts of personal information disclosure to police and FSB without court order, led to prosecution of political activists and common people. Good luck, Robin Hood (
- rolltiide 7y agowell the money is clean now and Sequoia followed the lead, so nobody important cares about that, lets stop spending resources on whitelisting monetary transactions to begin with. the audacity to try to limit capital flows based on owner behavior was always misguided. if you disagree with something Alisher did, then you have to indict the people that actually did it. vilifying money is just lazy.