4 ms·

Well, why do you think Robinhood is valued at $11.7e9 on $0.68e9 in revenue? It's not people investing a fraction of their pay cheques once a month.

JKCalhoun 6y ago
I don't know. You know something I had never thought before? "Hey, I have a business plan — and our target market is the poor." And yet I have been fascinated with the Dollar Generals (Family Dollar, etc.), the payday loan business, the lottery.... It sounds like you can make a business on the back of the poor – you just need volume.
- jdavis703 6y ago
  The bottom 10% of American households have negative net worth. I don’t think these people are significant players on the stock market.
  - runarberg 6y ago
    idk. I wouldn’t discount the promise of get out of dept quickly schemes. Reading headlines like “Made x millions on Robinhood”, “Invested in GameStop, now a millionaire” is doubly tempting for desperate folks. And if you have easy money available from predatory lenders (i.e. payday loans, second mortgages, etc.) I wouldn’t be surprised if a significant amount of the bottom 10% have lost money on the stock market. Of course this is a measurable figure, so I’m willing to accept that I might be wrong.
athrowaway3z 6y ago
Please make this notation become a standard thing across news papers and discussions across the world! Especially English<->Other european languages have different meanings to the word billion and miljard.
- samatman 6y ago
  It works here, for obvious reasons, but not nearly so many people know what $1e9 means as know what $1 billion means. Although if you dig into it, it turns out that a lot of people are hazy on exactly how much more a billion is than a million, or a trillion than a billion. Quite aside from the short and long scale thing, I just mean that instead of knowing that a billion is to a million as a million is to a thousand, their concept is more like a million is "big", billion is "really big" and trillion is "omg really really big!!!".
PartiallyTyped 6y ago
Order Flow and Data. If you have access to Order Flow you can make pennies on each trade, this is how High Frequency Trading companies make money. If you have access to Data, you can be one step ahead of the market and figure out the direction. Robinhood makes money by directing Order Flow through Citadel.
prewett 6y ago
That's only a P/E of 17.2, which is not all that high. Schwab has a P/E of 31.3. Walmart has a P/E of 28.6, Coca-Cola has 29.3, Apple has 33.4, Visa has 44.8. If anything I'd say that the market considers Robinhood a poor business. Walmart and Coca-Cola have higher P/Es, and they are only going to grow about as fast as global GDP since they've pretty much saturated their markets. So Robinhood has a substantially lower multiple than companies that we know aren't going to grow very fast. And it's less than half of its "stodgy" competitor where people do invest a fraction of their pay checks.
- conistonwater 6y ago
  P/E means price-earnings ratio, earnings means profits rather than revenues. E.g., Walmart has P/E of 28.6 but Price/Revenue=0.68 (https://finance.yahoo.com/quote/WMT/key-statistics?p=WMT https://finance.yahoo.com/quote/WMT/key-statistics?p=WMT)

JKCalhoun 6y ago

I don't know. You know something I had never thought before? "Hey, I have a business plan — and our target market is the poor." And yet I have been fascinated with the Dollar Generals (Family Dollar, etc.), the payday loan business, the lottery.... It sounds like you can make a business on the back of the poor – you just need volume.

jdavis703 6y ago
The bottom 10% of American households have negative net worth. I don’t think these people are significant players on the stock market.
- runarberg 6y ago
  idk. I wouldn’t discount the promise of get out of dept quickly schemes. Reading headlines like “Made x millions on Robinhood”, “Invested in GameStop, now a millionaire” is doubly tempting for desperate folks. And if you have easy money available from predatory lenders (i.e. payday loans, second mortgages, etc.) I wouldn’t be surprised if a significant amount of the bottom 10% have lost money on the stock market. Of course this is a measurable figure, so I’m willing to accept that I might be wrong.

athrowaway3z 6y ago

Please make this notation become a standard thing across news papers and discussions across the world! Especially English<->Other european languages have different meanings to the word billion and miljard.

samatman 6y ago
It works here, for obvious reasons, but not nearly so many people know what $1e9 means as know what $1 billion means. Although if you dig into it, it turns out that a lot of people are hazy on exactly how much more a billion is than a million, or a trillion than a billion. Quite aside from the short and long scale thing, I just mean that instead of knowing that a billion is to a million as a million is to a thousand, their concept is more like a million is "big", billion is "really big" and trillion is "omg really really big!!!".

PartiallyTyped 6y ago

Order Flow and Data. If you have access to Order Flow you can make pennies on each trade, this is how High Frequency Trading companies make money. If you have access to Data, you can be one step ahead of the market and figure out the direction. Robinhood makes money by directing Order Flow through Citadel.

prewett 6y ago

That's only a P/E of 17.2, which is not all that high. Schwab has a P/E of 31.3. Walmart has a P/E of 28.6, Coca-Cola has 29.3, Apple has 33.4, Visa has 44.8. If anything I'd say that the market considers Robinhood a poor business. Walmart and Coca-Cola have higher P/Es, and they are only going to grow about as fast as global GDP since they've pretty much saturated their markets. So Robinhood has a substantially lower multiple than companies that we know aren't going to grow very fast. And it's less than half of its "stodgy" competitor where people do invest a fraction of their pay checks.

conistonwater 6y ago
P/E means price-earnings ratio, earnings means profits rather than revenues. E.g., Walmart has P/E of 28.6 but Price/Revenue=0.68 (https://finance.yahoo.com/quote/WMT/key-statistics?p=WMT https://finance.yahoo.com/quote/WMT/key-statistics?p=WMT)