25 ms·

Robinhood S-1 IPO

298 points by marc__1 5y ago

slo_news 5y ago
"For the three months ended March 31, 2021, 17% of our total revenue was derived from transaction-based revenues earned from cryptocurrency transactions, compared to 4% for the three months year ended December 31, 2020." That's some pretty crazy growth! Granted, that was a unique time in crypto. But I'm sure history will repeat. Will be interesting to see how RH's crypto strategy develops based on this. Crypto essentially brings the payment for order flow in-house and makes RH the market maker for doge, BTC, etc. So maybe RH will just start to look more like Coinbase!
hpkuarg 5y ago
It would be poetic if the Robinhood IPO marks the local top of this bull market :-)
- paulpauper 5y ago
  Highly unlikely.
- devops000 5y ago
  Coinbase IPO did it for Bitcoin.
- CameronNemo 5y ago
  I think it will be shortly after independence day. Bad for nation building to have a correction right before the holiday.
bmmayer1 5y ago
$1 billion in top line revenue in 2020. Wow.
- paulpauper 5y ago
  So much for that media narrative of rh being hurt by bad press about gamestop. Rh is still hugely popular
  - conception 5y ago
    Well, said bad press was in 2021 so any effects have yet to be seen.
    - verdverm 5y ago
      Will it be the PR or that people were actively trading while lockdown was on? Anecdotally, I know several people who were active on RH until they went back to work
    - dmode 5y ago
      You should see their 2021 numbers. They are growing faster.
  - nerfhammer 5y ago
    My guess is all the media attention actually got them more signups
- ac29 5y ago
  Certainly puts that $70M SEC fine in perspective - that's not a trivial amount.
- arthurcolle 5y ago
  Stocks only go up
- fullshark 5y ago
  ~70% was transactions and ~20% was interest. For comparison about 60% of Etrade's revenue is interest and 30% is fees + commissions. Either Robinhood has found a smarter business model re: selling order flow or they are making a killing on crypto fees. The commission business model is dead for good I think. https://www.nasdaq.com/articles/net-interest-revenue-will-form-40-60-or-80-of-e-trades-stock-in-2020-2019-12-01 https://www.nasdaq.com/articles/net-interest-revenue-will-fo...
  - fnordfnordfnord 5y ago
    >or they are making a killing on crypto fees. They don't charge commissions to trade crypto. Not sure where they're skimming the money but the terrible order fills you get there gives me an idea.
    - edoceo 5y ago
      Front-running?
      - fnordfnordfnord 5y ago
        A rose by any other name...
      - gruez 5y ago
        No need. It's just like those "commission free" currency exchange places you see at airports and tourist areas. There might not be a commission, but the spread is several percent, and they make all their profit off that.
    - ralph84 5y ago
      There are no regulations on execution quality for crypto. RH treats crypto as forex and quotes their customers a huge markup on the bid/ask spread (think airport forex booth type spreads). RH customers can only trade with RH and their crappy spreads. RH won't match customer crypto orders against each other.
    - raziel2701 5y ago
- adam_arthur 5y ago
  Pretty sure they're counting any crypto bought as revenue, which seems highly misleading. Are they counting any stock purchased as revenue too? I don't understand the justification for that accounting at all. The profit on any transaction for them is 0 dollars, unless they're skimming on spreads or frontrunning or something else scammy. Square does this as well, which is how they got "200%" revenue growth. Correct me if I'm wrong.
  - kooshball 5y ago
    you are absolutely wrong. honestly the s-1 is not that hard to read. here is it page 131. Key Components of our Results of Operations Revenues Transaction-based revenues Transaction-based revenues consist of amount earned from routing customer orders for options, equities and cryptocurrencies to market makers. When customers place orders for equities, options or cryptocurrencies on our platform, we route these orders to market makers and we receive consideration from those brokers. With respect to equities and options trading, such fees are known as PFOF. With respect to cryptocurrency trading, we receive “Transaction Rebates.” In the case of equities, the fees we receive are typically based on the size of the publicly quoted bid-ask spread for the security being traded; that is, we receive a fixed percentage of the difference between the publicly quoted bid and ask at the time the trade is executed. For options, our fee is on a per contract basis based on the underlying security. In the case of cryptocurrencies, our rebate is a fixed percentage of the notional order value. Within each asset class, whether equities, options or cryptocurrencies, the transaction-based revenue we earn is calculated in an identical manner among all participating market makers. We route equity and option orders in priority to participating market makers that we believe are most likely to give our customers the best execution, based on historical performance, and we do not consider transaction fees when routing orders. For cryptocurrency orders, we route to various market makers that we believe offer competitive pricing, and we do not consider Transaction Rebates when routing cryptocurrency orders. Net interest revenues Net interest revenues consist of interest revenues less interest expenses. We earn interest revenues and incur interest expenses on securities lending transactions. We also earn interest revenues on margin loans to users, as well as on our segregated cash, cash and cash equivalents, and deposits with clearing organizations. We also incur interest expenses in connection with our revolving credit facilities. Other revenues Other revenues primarily consist of Robinhood Gold, a monthly paid subscription service that provides users with premium features such as enhanced instant deposits, professional research, Nasdaq Level II market data and, upon approval, access to margin investing. Other revenues also include proxy rebate revenues and miscellaneous fees charged to users.
rfd4sgmk8u 5y ago
buy buy buy. Bullish! Opinion: * RH will drag the industry to T+0 settlement, thus breaking wall street shenanigans with 100%+ short selling. Inevitable to see the merging of on-chain settlement with traditional stonks. * RH has the largest amount of Dogecoin AUM globally (8.7B $USD equiv) * RH has a lot of bitcoin, ether and other coins AUM. * RH will eventually be the biggest broker in the US (world)? * RH encourages dollar cost averaging and investing over time. * RH has lots of first time investors (18-24), who over time will grow to be big investors
- pavlov 5y ago
  > “ lots of first time investors (18-24), who over time will grow to be big investors” Or will be burned by the next prolonged downturn and exit the market permanently.
  - toomuchtodo 5y ago
    Absolutely. Sofi is the smart play there vs RH. Getting HNW folks onboard with student loan and HCOL property mortgages, and then cross selling them deposit accounts and investing access. “Young Money” Fidelity or Schwab. (not investing advice)
    - rfd4sgmk8u 5y ago
      Getting young people to get into debt is a very different thing than getting them to build assets. RH gives (small) margin loans from trading, not (large) student loans for marginally useful university courses.
  - jimbob45 5y ago
    "There is a famous story, we don’t know if it’s true, about how in the late summer of 1929, a shoe-shine boy gave Joe Kennedy stock tips, and Kennedy, being a wise old investor, thought, “If shoe shine boys are giving stock tips, then it’s time to get out of the market." Seems like I'm getting a lot of advice about the market from people with less knowledge about the market than shoe shine boys. My mom and my sister are invested in Dogecoin and neither can explain what a cryptocurrency is or even what the doge meme was to begin with. Seems like the next prolonged downturn is right around the corner.
tofuahdude 5y ago
Robinhood's "values": Safety First, Participation Is Power, Radical Customer Focus, and First-Principals Thinking There's a real dissonance in the combination of Safety First and Participation Is Power points. Where do we draw the line between providing the ability to participate and safety? Many of the tools Robinhood has "democratized" for the masses are in fact quite financially dangerous to unsophisticated users. They've game-ified complex financial instruments; that doesn't exactly speak to safety.
- pgwhalen 5y ago
  Would it be "dissonant" if a skydiving company advertised one of its values as prioritizing safety?
timdorr 5y ago
I wonder if they will list themselves on their IPO access offering: https://robinhood.com/us/en/support/articles/ipo-access/ https://robinhood.com/us/en/support/articles/ipo-access/ It's going to be interesting to buy Robinhood with Robinhood...
- qeternity 5y ago
  It’s interesting that they could be earning fees off their own underwriting. That would probably be an industry first.
  - _fat_santa 5y ago
    Intercontinental Exchange is a publicly traded company. And they own and operate NYSE.
    - qeternity 5y ago
      Yes, I know. I’m specifically talking about underwriting where the company raising funds typically pays a portion of the proceeds. This would be the first instance where the underwritee is earning fees off this process. This is different to having ICE shares trading on NYSE.
- martin_ 5y ago
  Looks like it: "RHF, one of our broker-dealer subsidiaries, is a member of the selling group for this offering. We expect the underwriters to reserve approximately 20 to 35% of the shares of our Class A common stock offered by this prospectus for RHF, acting as a selling group member, to allocate for sale to Robinhood customers through our IPO Access feature on our platform. Any such sales will be made at the same initial public offering price, and at the same time, as any other purchases in this offering, including purchases by institutions and other large investors, and in accordance with customary broker-dealer practices and procedures."
- carstenhag 5y ago
  Interesting, is that allowed in the US? In Germany, you can't buy Lang&Schwarz shares via the Lang&Schwarz trading platform (akin to an exchange) - doesn't matter what broker you are using. You always have to use Xetra or some other exchange.
tofuahdude 5y ago
Risk factors are lovely: We have been subject to regulatory investigations, actions and settlements and we expect to continue to be subject to such proceedings in the future, which could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business. We are involved in numerous litigation matters that are expensive and time-consuming, and, if resolved adversely, could harm our reputation, business, financial condition or results of operations. Our platform has been, and may in the future be, subject to interruption and instability due to operational and technological failures, whether internal or external.
- sithlord 5y ago
  I am 100% sure most companies can and do have those exact same risk factors, they don't really mean that much. Any company that operates in a highly regulated area (finance/health/gambling/etc) are going to have regulatory on their risk factors. Any Company whose business is run on an app or a website is going to have the tech failure one.
  - tofuahdude 5y ago
    "involved in numerous litigation matters" and "have been subject to regulatory investigations ... expect to continue to be subject to such proceedings" coming in on the heels of record-setting fines moves these risk factors from the usual corporate boilerplate to quite acute issues.
  - cmiles74 5y ago
    I'm skeptical that this claim is true. Even a cursory look at news articles related to Robin Hood shows that these concerns are way more than boilerplate legalese.
  - mym1990 5y ago
    I think it is one thing to have regulatory risks(of course those are always present), but another to have a recent history of investigation and to be wrapping up the largest fine in history. Obviously some or even many people will take these risks as a possible promise of greater returns and for the sake of Rh, I hope they get better and better at navigating the regulatory waters. It would be interesting to see the financials if and when another prolonged downturn happens.
LeifCarrotson 5y ago
The share count and price are redacted, though likely to be somewhere in the $30 billion range. Regardless, that helps put the $70 million fine from yesterday [1] in context. It was the largest fine in FINRA history, but will it have been worth it? The $65 million fine in December suggests they weren't sufficiently deterred to change. [1] https://news.ycombinator.com/item?id=27690543 https://news.ycombinator.com/item?id=27690543
- hardtke 5y ago
  $81B in assets under management vs. Fidelity with $10T? At some point, your revenue is capped at a fraction of a percent of assets under management.
  - kgwgk 5y ago
    If you have high enough turnover in your account sky is the limit.
- s1artibartfast 5y ago
  >The $65 million fine in December suggests they weren't sufficiently deterred to change People keep saying this, but the FINRA fine was for actions that took place before the 2020 SEC fine, and the SEC fine was for actions in 2015-18. It's not like they have a time machine.
deleted 5y ago
[deleted]
lame-robot-hoax 5y ago
“ A substantial portion of the recent growth in our net revenues earned from cryptocurrency transactions is attributable to transactions in Dogecoin. If demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected. For the three months ended March 31, 2021, 17% of our total revenue was derived from transaction-based revenues earned from cryptocurrency transactions, compared to 4% for the three months year ended December 31, 2020. While we currently support a portfolio of seven cryptocurrencies for trading, for the three months ended March 31, 2021, 34% of our cryptocurrency transaction-based revenue was attributable to transactions in Dogecoin, as compared to 4% for the three months ended December 31, 2020. As such, in addition to the factors impacting the broader cryptoeconomy described elsewhere in this section, RHC’s business may be adversely affected, and growth in our net revenue earned from cryptocurrency transactions may slow or decline, if the markets for Dogecoin deteriorate or if the price of Dogecoin declines, including as a result of factors such as negative perceptions of Dogecoin or the increased availability of Dogecoin on other cryptocurrency trading platforms.”
- an_opabinia 5y ago
  If you make the easiest to use Ponzi consuming tool, it doesn’t matter. There will always be more ponzis.
  - IntrepidWorm 5y ago
    True, but that doesn't mean we should give the best ponzi scheme a free pass. It's still a ponzi scheme.
- ttul 5y ago
  Dogecoin, created as a joke, is now in an S-1 as a material item.
  - agumonkey 5y ago
    after trump tenure this is the 2nd most absurdist fact about humanity the last 20 years to me
mulcahey 5y ago
I remember seeing their first public demo at LA Hacks in 2014. Seemed like a couple of kids right out of college. They had the iPhone's screen hooked up to the projector and one of their friends kept sending them silly text messages the whole time that they had to dismiss. This was before the Do Not Disturb feature came out. I remember wondering how it took so long for someone to make a half decent stock trading app for the iPhone -- all the other apps at the time sucked (and they largely still do). I was on ETrade before but signed up for the Robinhood waitlist immediately -- haven't left since being allowed in early 2015.
- tw600040 5y ago
  Can you elaborate on why you think robin hood is better than etrade?
  - mulcahey 5y ago
    I’m not the most sophisticated trader but I appreciate their UX and simplicity, which I think is true of most of their user base
    - rezistik 5y ago
      I think the question is whether RH is sticky, they have good traction in growth, and I think it will be sticky. If enough people are doing fractional shares trading it's really hard to transfer out fractional shares to different brokers. Might actually not be possible.
      - pedroma 5y ago
        I did an ACATS from RH. They just sell the fractional shares at market price and send the cash.
        rezistik 5y ago
        Right so you have to purchase your fractional shares on your next platform, which I guess would only amount to the fractions so maybe not a huge deal if you have 100.5 of a stock you're only losing the .5, but it could add up if you have a really diverse portfolio.
yawaworht1978 5y ago
Ok let's see. Average funds per user in custody is 4500$. Organic or referred new customers 80percent is an incredibly misleading number. I know that in this industry lead generation, rev share or signup deals are very lucrative/expensive, only crypto exchanges and online casinos pay out more. If they are holding 4500 on average and and we assume 2 percent commission fees, then that will be 90 use life time value on average, let's not even calculate the acquisition costs, might well be that 80percent come from referrals. That will be 1.6 annual revenue before marketing cost, salaries, referrals, rent etc. Maybe they sell some customer data but what would a good stock price estimate be here? How many shares will be issued?
abriosi 5y ago
That's what happens when you spend a decade printing a lot of money Value becomes diluted
- paulpauper 5y ago
  this logic makes no sense. did you get this from peters schiff.com or something? Tech stocks surged in the 90s despite the fed raising rates and the treasury runing a budget surplus.
  - whateveracct 5y ago
    Monetary policy makes people viscerally upset for some reason
    - deleted 5y ago
      [deleted]
  - onlyrealcuzzo 5y ago
    Why can't low interest rates be good for tech stocks, but also all the innovation in the 90s be good for tech stocks? It appears like you're saying that only one of these can possibly be good for tech stocks. Why not both? How do you know tech stocks couldn't have done much better in the 90s under different monetary conditions (ZIRP and a Federal Deficit of 35% of GDP)?
    - deleted 5y ago
      [deleted]
    - paulpauper 5y ago
      speculative bubbles are independent of monetary and fiscal policy. if someone thinks they can make 100% returns on their investment,what difference does 0 vs 2% interest rate makes? Look at the housing market in the 2000s , which surged despite interest rates being high.
granzymes 5y ago
Headline financials: FY Ended December 31, in millions except percentage and assets per user | 2019 | 2020 | YoY ---------------|--------|--------|------- revenue | $278 | $959 | 245% op ex | $384 | $945 | 146% net income | $(107) | $7 | (107)% assets held | 14,136 | 62,979 | 346% monthly users | 4.3 | 11.7 | 172% assets per user| 3,287 | 5,382 | 64%
- raziel2701 5y ago
  Also the cash - liabilities calculus not looking good. $8.8B in cash - $7.7B in liabilties = - $1.1 billion I'll pass.
  - mrkramer 5y ago
    Yup....Their business depends on dogecoin I mean good luck with that.
  - alliao 5y ago
    it is slightly worrying that society allows something so big that's so... fragile? it's like a disaster waiting to happen and bound to cause massive amounts of damage...
  - bern4444 5y ago
    Exactly, imagine if they're margin is margin called. They don't have enough assets to handle abnormal (but not unlikely) swings. So they're forced to disallow types of trading. I'm surprised capital requirements aren't in place
  - DCF 5y ago
    I'm curious why this alone is such a problem? This is substantially better than many other companies at IPO.
    - raziel2701 5y ago
      I have certain things I look for to determine if a company is worth researching more, and one of them is if they're highly profitable (they're not), if they have a lot of free cash flow (they don't). I cannot evaluate what their assets amounting to $15B are and whether or not these are under/overvalued, so instead I look at cash - debt as that's something I understand much better. There's no magical formula, tons of people like to put money on unprofitable companies that have a lot of hype and tell you a good story about their mission. For me, I look for companies that are making money today, that have a good earnings rate of growth relative to their p/e ratio, and a business that I understand. Robinhood is not that. It could be that in the future when I revisit it in a couple quarters or more, but it's not for me. Hence why I'll pass on this one.
rburhum 5y ago
I understand that many give Robinhood crap because it is not "sophisticated enough" or because of the Gamestop fiasco. Although many startups like to claim that they are "democratizing [x]", I honestly believe they did it. I have many friends that never traded before, and after they got their Robinhood account they feel comfortable enough to do it often. Even myself, who used to only trade a couple of times a year, started with $300 in my Robinhood account a few years back. Now I have at least ~60k that I rotate around in my Robinhood account on a daily/weekly basis. Yes there are other services that I now use or other apps that seems better, but for all intents and purposes, Robinhood did "democratize" trading for me.
- cwkoss 5y ago
  If they removed all of the dark patterns from their UI, I think they could be a real social good.
  - deleted 5y ago
    [deleted]
- yreg 5y ago
  If I went for this positive spin, I'd talk about democratising investing, not democratising trading. Democratising trading is not inherently good, similar to democratising gambling.
  - onlyrealcuzzo 5y ago
    If people want to gamble (or do drugs), why should we be nannies and stop them? I get the desire to stop commercial banks from gambling YOUR savings. But why shouldn't you be able to gamble your own savings if you want to?
    - 2OEH8eoCRo0 5y ago
      Huge societal costs that we all bear?
swarnie_ 5y ago
I imagine a large portion of the internet newly flushed with GME/AMC/WISH cash are lining up to short this in to the ground. I'll personably be buying everything i can get my hands on three months after launch
- FinanceAnon 5y ago
  Would be hilarious if they ended up on the other end of a short squeeze.
  - swarnie_ 5y ago
    That's exactly what i'm aiming for, i'll chuck a few grand in the opposite direction just for a laugh.
gberger 5y ago
The Chief Legal Officer, Daniel Gallagher, made $30M this year. It breaks down into $257k cash, $4.2M bonus and $25.5M in stocks and options. This is a far larger amount than any other executive. In 2011-2015, Daniel Gallagher was 1 of 5 Commissioners of the SEC (Securities and Exchange _Commission_), the highest role of the SEC, appointed by the US President. He was hired by Robinhood in May 2020, and his previous job was at WilmerHale, a firm specializing in defending other firms against the SEC. This guy must be worth his weight in gold in avoiding regulatory fines for Robinhood.
- DSingularity 5y ago
  How do you value the stock options of a company that hasn’t had its IPO?
  - jjice 5y ago
    Maybe off of current worth estimated after sale of shares to earlier investors? I'm not completely sure though.
  - wfleming 5y ago
    Probably using the same fair market value that pre-IPO startups calculate to assess your tax liability when you exercise options.
  - mdoms 5y ago
    Same way you do after an IPO. Based on the sale price of the stock.
  - bhahn 5y ago
    You generally use 409a valuations, which increase in regularity and accuracy as the company matures (ie. gets bigger and closer to an actual IPO).
    - plank_time 5y ago
      As a former Uber employee, I assure you they do not become more accurate. It’s all based on funding rounds etc. The stock market is a different beast altogether.
nemothekid 5y ago
They went from 170MM in revenue in 2019 to 720MM in revenue in 2020. Wow will that be a temporary spike or sustained?
- mrkramer 5y ago
  Temporary; meme stocks and meme cryptocoins can not last forever.
  - paxys 5y ago
    Sure but something else will come and replace them. Selling shovels is always a smart business move.
- adam_arthur 5y ago
  They count crypto sold as revenue. So that number is very misleading
- dmode 5y ago
  3 months ending 2021, they have already made ~500mn. This is sustained rocket ship
tester756 5y ago
I always wonder how many hours goes into creating & reviewing this big ass document also how careful you have to be to get this right
CapriciousCptl 5y ago
Per-user revenue was $109 for 2020. My goodness payment for order flow and cryptocurrency rebates are lucrative.
- ok2938 5y ago
  Funny that you are being played most, when you think you are in control.
  - RobRivera 5y ago
    yea - everytime I try to explain to peers and family what the price of free is, deaf ears.
    - ivalm 5y ago
      It’s better than free, you get a discount relative to NBBO.
      - repsilat 5y ago
        The higher-level argument might be that if PFOF didn't exist, NBBO might be better. If Citadel et al wanted to make markets they'd have to publish their prices. (Of course, that gets rid of the "market segmentation" signals, so it'd probably make life a little better for institutions and make life a little worse for individuals, on net. No doubt smart people could disagree about how much of each effect there would be.)
        ivalm 5y ago
        > that gets rid of the "market segmentation" signals Exactly, retail investors should basically be happy with PFOF.
    - missedthecue 5y ago
      I understand that Robinhood sells order flow and that you may get a worse fill because of it, but is the average Robinhood user getting 3 cents of slippage on their order of 1 share of Ford worse than a $10 round trip in order fees from a more premium broker on the same trade? I think the order flow model is better for most retail traders. Obviously, if you're buying $20k in stock at a time, paying the fees will be better, but that's not your average Robinhood user.
newfonewhodis 5y ago
Looks like the founders already sold $220M worth of stock: > 2019 Tender Offer > In August 2019, we entered into a letter agreement with certain holders of our capital stock, pursuant to which we agreed to waive certain transfer restrictions in connection with, and assist in the administration of, a tender offer that such holders proposed to commence. From August 2019 through September 2019, these holders commenced a tender offer to purchase shares of our capital stock from certain of our employee stockholders, including our Co-Founder and CEO, Vladimir Tenev, and Co-Founder and Chief Creative Officer and then-co-CEO Baiju Bhatt. An aggregate of 5.4 million shares of our capital stock were tendered pursuant to the tender offer for an aggregate purchase price of $67.6 million, or $12.4827 per share. > 2018 Secondary Sales > On April 3, 2018, our Co-Founder and CEO, Vladimir Tenev, our Co-Founder and Chief Creative Officer and then-co-CEO, Baiju Bhatt, our then-Chief Operating Officer, Nathan Rodland, and one other employee, each individually entered into common stock purchase agreements with certain other holders of our capital stock, including entities affiliated with DST Global, pursuant to which they sold shares of our common stock to the purchasing stockholders at a purchase price of $10.145 per share. In total, Mr. Bhatt sold 5,421,389 shares of common stock for an aggregate purchase price of $55.0 million; Mr. Rodland sold 295,712 shares of common stock for an aggregate purchase price of $3.0 million; and Mr. Tenev sold 5,421,389 shares of common stock for an aggregate purchase price of $55.0 million. As part of these sales, each of Mr. Bhatt and Mr. Tenev sold 739,280 shares of our common stock to entities affiliated with DST Global. What a joke. Founders got rich beyond imagination dumping all the risk on employees.
- ffggvv 5y ago
  “dumping all the risk” except it’s ipoing for far higher price than they got. so the employees are going to make far more per share than they did.
edoceo 5y ago
Hmm. Vice says the CEO (Vlad) had his phone seized - not for this thing but for the meme stock mess. Seems like a very big deal. https://www.vice.com/en/article/wx5p8z/feds-seized-robinhood-ceos-phone-in-gamestop-trading-halt-investigation https://www.vice.com/en/article/wx5p8z/feds-seized-robinhood...
- ZoomerCretin 5y ago
  I was called a conspiracy theorist only yesterday for claiming there was anything wrong with the restrictions. I’m glad to know numerous federal agencies share my views.
  - jw1224 5y ago
    I don’t know why you’re getting downvoted… You’re not the only one. For some reason, defending hedge funds who’ve been blatantly manipulating the market seems, to draw a lot of vigorous defendants on here. https://prospect.org/power/how-the-gamestop-hustle-worked/ https://prospect.org/power/how-the-gamestop-hustle-worked/
  - weird-eye-issue 5y ago
    There was literally a congressional hearing months ago about this. It's not like it's new that there is attention on this from the federal level.
  - pgwhalen 5y ago
    Federal agencies investigating the situation does not mean they think there was anything wrong with it.
seanarnold 5y ago
Wow, I should become a Chief Legal Officer..
hsaliak 5y ago
Robbin’ Da Hood. The GameStop fiasco was unforgivable.
bern4444 5y ago
Alright, wsb has been waiting for this. Time to short (or buy puts) on Robinhood through Robinhood. Though Robinhood advanced 0 commission trading (though I think it was inevitable), it's a terrible platform.
MangoCoffee 5y ago
i have $22k in Robinhood as "play money" to trade and learn. i lost $400 on AMD calls. WSB said the first time is free but i didn't win at the Casino. after my first failed calls, i just buy and sell stock. i bought 600ish HP stocks when it was low and sell it too soon when HP stock went up. overall, Robinhood have the best UI compare to tdameritrade and it isn't too bad if you just do normal trade and not options. one thing that Robinhood did that disrupt the retail trade is their no fee. tdameritrade used to charge $7 to buy/sell stock.
Dopameaner 5y ago
its crazy how the CFO and CLO total compensation were 18m and 30m respectively.
deanmoriarty 5y ago
I am too lazy to go dig up the links, but there were many, many people on HN who declared Robinhood completely dead after they temporarily prevented users from transacting GME… they said they would either go bankrupt or users would just completely stop using them, and they were absolutely and comically convinced of that. HN should stick to programming opinions :-)
- matt_s 5y ago
  You didn’t live thru 1999-2001 then. Just cuz a company has an IPO doesn’t mean they have a viable business.
mherdeg 5y ago
Robinhood closed my brokerage account after I did transferred out assets (via ACATS transfer, to get a signup bonus with another brokerage without realizing capital gains). A few months later I asked how to reopen the account, using the "reopen account" form in their app to generate a support ticket. Three weeks later they sent an email saying that my account was permanently closed and I should apply for a new account. Replies to this email yielded a response saying that their email server was failing to accepting messages. So as requested I applied for a new account; the application stayed pending for three weeks, then I got an email autoreply telling me that my application is denied because I have a preexisting account (i.e. the old closed one). Replies to this email also yielded a response saying that their email server was failing to accepting messages. I filed a new support case explaining what had happened, what they told me to do, and asking what I should do next. No reply whatsoever.
- XIVMagnus 5y ago
  RH is basically shit. I immediately transferred out of RH during the whole GME craze when they froze trading
- bob1029 5y ago
  I went through this exact same scenario. Had to create another email address to get the 2nd account going. Total garbage experience.
  - nvr219 5y ago
    Why did you want to go back there so bad?
    - bob1029 5y ago
      I maintain multiple brokerages. Fidelity, IBKR and Robinhood. The reason I keep RH around is because they have virtually zero restrictions around advanced trading. I basically put all my hyper-risky options stuff in the RH bucket. All my serious money lives elsewhere. I use RH pretty much exactly the way they want me to.
- 5y ago
signa11 5y ago
in other news this : https://www.vice.com/en/article/wx5p8z/feds-seized-robinhood-ceos-phone-in-gamestop-trading-halt-investigation https://www.vice.com/en/article/wx5p8z/feds-seized-robinhood...
anonu 5y ago
This is incredible on many fronts and I congratulate them. But I do need to reiterate my stance on this: they are a gambling company. The proof is in their own words in the S1: we are a safety first company. What Fintech firm says that? Nonetheless I'm sure they will continue to expand their product line away from gamification of day trading and into gamification of investing... A much better business.
- jjeaff 5y ago
  What does safety first even mean in that context? Do they mean safety of the company and/or end user? By danger, are they referencing the danger of losing all your money due to gambling it away? Or maybe avoiding suicides by making sure they always report correct balances?
rpmisms 5y ago
They should have waited longer. They just pissed off the internet.
lanbanger 5y ago
Yours. In size.
gregwebs 5y ago
RobinHood users should consider M1 Finance. It’s a better way to invest by allocating pies instead of making trades. However there are no options and they don’t offer OTC or anything low liquidity.

298 points by marc__1 5y ago

"For the three months ended March 31, 2021, 17% of our total revenue was derived from transaction-based revenues earned from cryptocurrency transactions, compared to 4% for the three months year ended December 31, 2020." That's some pretty crazy growth! Granted, that was a unique time in crypto. But I'm sure history will repeat. Will be interesting to see how RH's crypto strategy develops based on this. Crypto essentially brings the payment for order flow in-house and makes RH the market maker for doge, BTC, etc. So maybe RH will just start to look more like Coinbase!

hpkuarg 5y ago

It would be poetic if the Robinhood IPO marks the local top of this bull market :-)

paulpauper 5y ago
Highly unlikely.
devops000 5y ago
Coinbase IPO did it for Bitcoin.
CameronNemo 5y ago
I think it will be shortly after independence day. Bad for nation building to have a correction right before the holiday.

bmmayer1 5y ago

$1 billion in top line revenue in 2020. Wow.

paulpauper 5y ago
So much for that media narrative of rh being hurt by bad press about gamestop. Rh is still hugely popular
- conception 5y ago
  Well, said bad press was in 2021 so any effects have yet to be seen.
  - verdverm 5y ago
    Will it be the PR or that people were actively trading while lockdown was on? Anecdotally, I know several people who were active on RH until they went back to work
  - dmode 5y ago
    You should see their 2021 numbers. They are growing faster.
- nerfhammer 5y ago
  My guess is all the media attention actually got them more signups
ac29 5y ago
Certainly puts that $70M SEC fine in perspective - that's not a trivial amount.
arthurcolle 5y ago
Stocks only go up
fullshark 5y ago
~70% was transactions and ~20% was interest. For comparison about 60% of Etrade's revenue is interest and 30% is fees + commissions. Either Robinhood has found a smarter business model re: selling order flow or they are making a killing on crypto fees. The commission business model is dead for good I think. https://www.nasdaq.com/articles/net-interest-revenue-will-form-40-60-or-80-of-e-trades-stock-in-2020-2019-12-01 https://www.nasdaq.com/articles/net-interest-revenue-will-fo...
- fnordfnordfnord 5y ago
  >or they are making a killing on crypto fees. They don't charge commissions to trade crypto. Not sure where they're skimming the money but the terrible order fills you get there gives me an idea.
  - edoceo 5y ago
    Front-running?
    - fnordfnordfnord 5y ago
      A rose by any other name...
    - gruez 5y ago
      No need. It's just like those "commission free" currency exchange places you see at airports and tourist areas. There might not be a commission, but the spread is several percent, and they make all their profit off that.
  - ralph84 5y ago
    There are no regulations on execution quality for crypto. RH treats crypto as forex and quotes their customers a huge markup on the bid/ask spread (think airport forex booth type spreads). RH customers can only trade with RH and their crappy spreads. RH won't match customer crypto orders against each other.
  - raziel2701 5y ago
adam_arthur 5y ago
Pretty sure they're counting any crypto bought as revenue, which seems highly misleading. Are they counting any stock purchased as revenue too? I don't understand the justification for that accounting at all. The profit on any transaction for them is 0 dollars, unless they're skimming on spreads or frontrunning or something else scammy. Square does this as well, which is how they got "200%" revenue growth. Correct me if I'm wrong.
- kooshball 5y ago
  you are absolutely wrong. honestly the s-1 is not that hard to read. here is it page 131. Key Components of our Results of Operations Revenues Transaction-based revenues Transaction-based revenues consist of amount earned from routing customer orders for options, equities and cryptocurrencies to market makers. When customers place orders for equities, options or cryptocurrencies on our platform, we route these orders to market makers and we receive consideration from those brokers. With respect to equities and options trading, such fees are known as PFOF. With respect to cryptocurrency trading, we receive “Transaction Rebates.” In the case of equities, the fees we receive are typically based on the size of the publicly quoted bid-ask spread for the security being traded; that is, we receive a fixed percentage of the difference between the publicly quoted bid and ask at the time the trade is executed. For options, our fee is on a per contract basis based on the underlying security. In the case of cryptocurrencies, our rebate is a fixed percentage of the notional order value. Within each asset class, whether equities, options or cryptocurrencies, the transaction-based revenue we earn is calculated in an identical manner among all participating market makers. We route equity and option orders in priority to participating market makers that we believe are most likely to give our customers the best execution, based on historical performance, and we do not consider transaction fees when routing orders. For cryptocurrency orders, we route to various market makers that we believe offer competitive pricing, and we do not consider Transaction Rebates when routing cryptocurrency orders. Net interest revenues Net interest revenues consist of interest revenues less interest expenses. We earn interest revenues and incur interest expenses on securities lending transactions. We also earn interest revenues on margin loans to users, as well as on our segregated cash, cash and cash equivalents, and deposits with clearing organizations. We also incur interest expenses in connection with our revolving credit facilities. Other revenues Other revenues primarily consist of Robinhood Gold, a monthly paid subscription service that provides users with premium features such as enhanced instant deposits, professional research, Nasdaq Level II market data and, upon approval, access to margin investing. Other revenues also include proxy rebate revenues and miscellaneous fees charged to users.

rfd4sgmk8u 5y ago

buy buy buy. Bullish! Opinion: * RH will drag the industry to T+0 settlement, thus breaking wall street shenanigans with 100%+ short selling. Inevitable to see the merging of on-chain settlement with traditional stonks. * RH has the largest amount of Dogecoin AUM globally (8.7B $USD equiv) * RH has a lot of bitcoin, ether and other coins AUM. * RH will eventually be the biggest broker in the US (world)? * RH encourages dollar cost averaging and investing over time. * RH has lots of first time investors (18-24), who over time will grow to be big investors

pavlov 5y ago
> “ lots of first time investors (18-24), who over time will grow to be big investors” Or will be burned by the next prolonged downturn and exit the market permanently.
- toomuchtodo 5y ago
  Absolutely. Sofi is the smart play there vs RH. Getting HNW folks onboard with student loan and HCOL property mortgages, and then cross selling them deposit accounts and investing access. “Young Money” Fidelity or Schwab. (not investing advice)
  - rfd4sgmk8u 5y ago
    Getting young people to get into debt is a very different thing than getting them to build assets. RH gives (small) margin loans from trading, not (large) student loans for marginally useful university courses.
- jimbob45 5y ago
  "There is a famous story, we don’t know if it’s true, about how in the late summer of 1929, a shoe-shine boy gave Joe Kennedy stock tips, and Kennedy, being a wise old investor, thought, “If shoe shine boys are giving stock tips, then it’s time to get out of the market." Seems like I'm getting a lot of advice about the market from people with less knowledge about the market than shoe shine boys. My mom and my sister are invested in Dogecoin and neither can explain what a cryptocurrency is or even what the doge meme was to begin with. Seems like the next prolonged downturn is right around the corner.

tofuahdude 5y ago

Robinhood's "values": Safety First, Participation Is Power, Radical Customer Focus, and First-Principals Thinking There's a real dissonance in the combination of Safety First and Participation Is Power points. Where do we draw the line between providing the ability to participate and safety? Many of the tools Robinhood has "democratized" for the masses are in fact quite financially dangerous to unsophisticated users. They've game-ified complex financial instruments; that doesn't exactly speak to safety.

pgwhalen 5y ago
Would it be "dissonant" if a skydiving company advertised one of its values as prioritizing safety?

timdorr 5y ago

I wonder if they will list themselves on their IPO access offering: https://robinhood.com/us/en/support/articles/ipo-access/ https://robinhood.com/us/en/support/articles/ipo-access/ It's going to be interesting to buy Robinhood with Robinhood...

qeternity 5y ago
It’s interesting that they could be earning fees off their own underwriting. That would probably be an industry first.
- _fat_santa 5y ago
  Intercontinental Exchange is a publicly traded company. And they own and operate NYSE.
  - qeternity 5y ago
    Yes, I know. I’m specifically talking about underwriting where the company raising funds typically pays a portion of the proceeds. This would be the first instance where the underwritee is earning fees off this process. This is different to having ICE shares trading on NYSE.
martin_ 5y ago
Looks like it: "RHF, one of our broker-dealer subsidiaries, is a member of the selling group for this offering. We expect the underwriters to reserve approximately 20 to 35% of the shares of our Class A common stock offered by this prospectus for RHF, acting as a selling group member, to allocate for sale to Robinhood customers through our IPO Access feature on our platform. Any such sales will be made at the same initial public offering price, and at the same time, as any other purchases in this offering, including purchases by institutions and other large investors, and in accordance with customary broker-dealer practices and procedures."
carstenhag 5y ago
Interesting, is that allowed in the US? In Germany, you can't buy Lang&Schwarz shares via the Lang&Schwarz trading platform (akin to an exchange) - doesn't matter what broker you are using. You always have to use Xetra or some other exchange.

tofuahdude 5y ago

Risk factors are lovely: We have been subject to regulatory investigations, actions and settlements and we expect to continue to be subject to such proceedings in the future, which could cause us to incur substantial costs or require us to change our business practices in a manner materially adverse to our business. We are involved in numerous litigation matters that are expensive and time-consuming, and, if resolved adversely, could harm our reputation, business, financial condition or results of operations. Our platform has been, and may in the future be, subject to interruption and instability due to operational and technological failures, whether internal or external.

sithlord 5y ago
I am 100% sure most companies can and do have those exact same risk factors, they don't really mean that much. Any company that operates in a highly regulated area (finance/health/gambling/etc) are going to have regulatory on their risk factors. Any Company whose business is run on an app or a website is going to have the tech failure one.
- tofuahdude 5y ago
  "involved in numerous litigation matters" and "have been subject to regulatory investigations ... expect to continue to be subject to such proceedings" coming in on the heels of record-setting fines moves these risk factors from the usual corporate boilerplate to quite acute issues.
- cmiles74 5y ago
  I'm skeptical that this claim is true. Even a cursory look at news articles related to Robin Hood shows that these concerns are way more than boilerplate legalese.
- mym1990 5y ago
  I think it is one thing to have regulatory risks(of course those are always present), but another to have a recent history of investigation and to be wrapping up the largest fine in history. Obviously some or even many people will take these risks as a possible promise of greater returns and for the sake of Rh, I hope they get better and better at navigating the regulatory waters. It would be interesting to see the financials if and when another prolonged downturn happens.

LeifCarrotson 5y ago

The share count and price are redacted, though likely to be somewhere in the $30 billion range. Regardless, that helps put the $70 million fine from yesterday [1] in context. It was the largest fine in FINRA history, but will it have been worth it? The $65 million fine in December suggests they weren't sufficiently deterred to change. [1] https://news.ycombinator.com/item?id=27690543 https://news.ycombinator.com/item?id=27690543

hardtke 5y ago
$81B in assets under management vs. Fidelity with $10T? At some point, your revenue is capped at a fraction of a percent of assets under management.
- kgwgk 5y ago
  If you have high enough turnover in your account sky is the limit.
s1artibartfast 5y ago
>The $65 million fine in December suggests they weren't sufficiently deterred to change People keep saying this, but the FINRA fine was for actions that took place before the 2020 SEC fine, and the SEC fine was for actions in 2015-18. It's not like they have a time machine.

deleted 5y ago

[deleted]

lame-robot-hoax 5y ago

“ A substantial portion of the recent growth in our net revenues earned from cryptocurrency transactions is attributable to transactions in Dogecoin. If demand for transactions in Dogecoin declines and is not replaced by new demand for other cryptocurrencies available for trading on our platform, our business, financial condition and results of operations could be adversely affected. For the three months ended March 31, 2021, 17% of our total revenue was derived from transaction-based revenues earned from cryptocurrency transactions, compared to 4% for the three months year ended December 31, 2020. While we currently support a portfolio of seven cryptocurrencies for trading, for the three months ended March 31, 2021, 34% of our cryptocurrency transaction-based revenue was attributable to transactions in Dogecoin, as compared to 4% for the three months ended December 31, 2020. As such, in addition to the factors impacting the broader cryptoeconomy described elsewhere in this section, RHC’s business may be adversely affected, and growth in our net revenue earned from cryptocurrency transactions may slow or decline, if the markets for Dogecoin deteriorate or if the price of Dogecoin declines, including as a result of factors such as negative perceptions of Dogecoin or the increased availability of Dogecoin on other cryptocurrency trading platforms.”

an_opabinia 5y ago
If you make the easiest to use Ponzi consuming tool, it doesn’t matter. There will always be more ponzis.
- IntrepidWorm 5y ago
  True, but that doesn't mean we should give the best ponzi scheme a free pass. It's still a ponzi scheme.
ttul 5y ago
Dogecoin, created as a joke, is now in an S-1 as a material item.
- agumonkey 5y ago
  after trump tenure this is the 2nd most absurdist fact about humanity the last 20 years to me

mulcahey 5y ago

I remember seeing their first public demo at LA Hacks in 2014. Seemed like a couple of kids right out of college. They had the iPhone's screen hooked up to the projector and one of their friends kept sending them silly text messages the whole time that they had to dismiss. This was before the Do Not Disturb feature came out. I remember wondering how it took so long for someone to make a half decent stock trading app for the iPhone -- all the other apps at the time sucked (and they largely still do). I was on ETrade before but signed up for the Robinhood waitlist immediately -- haven't left since being allowed in early 2015.

tw600040 5y ago
Can you elaborate on why you think robin hood is better than etrade?
- mulcahey 5y ago
  I’m not the most sophisticated trader but I appreciate their UX and simplicity, which I think is true of most of their user base
  - rezistik 5y ago
    I think the question is whether RH is sticky, they have good traction in growth, and I think it will be sticky. If enough people are doing fractional shares trading it's really hard to transfer out fractional shares to different brokers. Might actually not be possible.
    - pedroma 5y ago
      I did an ACATS from RH. They just sell the fractional shares at market price and send the cash.
      - rezistik 5y ago
        Right so you have to purchase your fractional shares on your next platform, which I guess would only amount to the fractions so maybe not a huge deal if you have 100.5 of a stock you're only losing the .5, but it could add up if you have a really diverse portfolio.

yawaworht1978 5y ago

Ok let's see. Average funds per user in custody is 4500$. Organic or referred new customers 80percent is an incredibly misleading number. I know that in this industry lead generation, rev share or signup deals are very lucrative/expensive, only crypto exchanges and online casinos pay out more. If they are holding 4500 on average and and we assume 2 percent commission fees, then that will be 90 use life time value on average, let's not even calculate the acquisition costs, might well be that 80percent come from referrals. That will be 1.6 annual revenue before marketing cost, salaries, referrals, rent etc. Maybe they sell some customer data but what would a good stock price estimate be here? How many shares will be issued?

abriosi 5y ago

That's what happens when you spend a decade printing a lot of money Value becomes diluted

paulpauper 5y ago
this logic makes no sense. did you get this from peters schiff.com or something? Tech stocks surged in the 90s despite the fed raising rates and the treasury runing a budget surplus.
- whateveracct 5y ago
  Monetary policy makes people viscerally upset for some reason
  - deleted 5y ago
    [deleted]
- onlyrealcuzzo 5y ago
  Why can't low interest rates be good for tech stocks, but also all the innovation in the 90s be good for tech stocks? It appears like you're saying that only one of these can possibly be good for tech stocks. Why not both? How do you know tech stocks couldn't have done much better in the 90s under different monetary conditions (ZIRP and a Federal Deficit of 35% of GDP)?
  - deleted 5y ago
    [deleted]
  - paulpauper 5y ago
    speculative bubbles are independent of monetary and fiscal policy. if someone thinks they can make 100% returns on their investment,what difference does 0 vs 2% interest rate makes? Look at the housing market in the 2000s , which surged despite interest rates being high.

granzymes 5y ago

Headline financials: FY Ended December 31, in millions except percentage and assets per user | 2019 | 2020 | YoY ---------------|--------|--------|------- revenue | $278 | $959 | 245% op ex | $384 | $945 | 146% net income | $(107) | $7 | (107)% assets held | 14,136 | 62,979 | 346% monthly users | 4.3 | 11.7 | 172% assets per user| 3,287 | 5,382 | 64%

raziel2701 5y ago
Also the cash - liabilities calculus not looking good. $8.8B in cash - $7.7B in liabilties = - $1.1 billion I'll pass.
- mrkramer 5y ago
  Yup....Their business depends on dogecoin I mean good luck with that.
- alliao 5y ago
  it is slightly worrying that society allows something so big that's so... fragile? it's like a disaster waiting to happen and bound to cause massive amounts of damage...
- bern4444 5y ago
  Exactly, imagine if they're margin is margin called. They don't have enough assets to handle abnormal (but not unlikely) swings. So they're forced to disallow types of trading. I'm surprised capital requirements aren't in place
- DCF 5y ago
  I'm curious why this alone is such a problem? This is substantially better than many other companies at IPO.
  - raziel2701 5y ago
    I have certain things I look for to determine if a company is worth researching more, and one of them is if they're highly profitable (they're not), if they have a lot of free cash flow (they don't). I cannot evaluate what their assets amounting to $15B are and whether or not these are under/overvalued, so instead I look at cash - debt as that's something I understand much better. There's no magical formula, tons of people like to put money on unprofitable companies that have a lot of hype and tell you a good story about their mission. For me, I look for companies that are making money today, that have a good earnings rate of growth relative to their p/e ratio, and a business that I understand. Robinhood is not that. It could be that in the future when I revisit it in a couple quarters or more, but it's not for me. Hence why I'll pass on this one.

rburhum 5y ago

I understand that many give Robinhood crap because it is not "sophisticated enough" or because of the Gamestop fiasco. Although many startups like to claim that they are "democratizing [x]", I honestly believe they did it. I have many friends that never traded before, and after they got their Robinhood account they feel comfortable enough to do it often. Even myself, who used to only trade a couple of times a year, started with $300 in my Robinhood account a few years back. Now I have at least ~60k that I rotate around in my Robinhood account on a daily/weekly basis. Yes there are other services that I now use or other apps that seems better, but for all intents and purposes, Robinhood did "democratize" trading for me.

cwkoss 5y ago
If they removed all of the dark patterns from their UI, I think they could be a real social good.
- deleted 5y ago
  [deleted]
yreg 5y ago
If I went for this positive spin, I'd talk about democratising investing, not democratising trading. Democratising trading is not inherently good, similar to democratising gambling.
- onlyrealcuzzo 5y ago
  If people want to gamble (or do drugs), why should we be nannies and stop them? I get the desire to stop commercial banks from gambling YOUR savings. But why shouldn't you be able to gamble your own savings if you want to?
  - 2OEH8eoCRo0 5y ago
    Huge societal costs that we all bear?

swarnie_ 5y ago

I imagine a large portion of the internet newly flushed with GME/AMC/WISH cash are lining up to short this in to the ground. I'll personably be buying everything i can get my hands on three months after launch

FinanceAnon 5y ago
Would be hilarious if they ended up on the other end of a short squeeze.
- swarnie_ 5y ago
  That's exactly what i'm aiming for, i'll chuck a few grand in the opposite direction just for a laugh.

gberger 5y ago

The Chief Legal Officer, Daniel Gallagher, made $30M this year. It breaks down into $257k cash, $4.2M bonus and $25.5M in stocks and options. This is a far larger amount than any other executive. In 2011-2015, Daniel Gallagher was 1 of 5 Commissioners of the SEC (Securities and Exchange _Commission_), the highest role of the SEC, appointed by the US President. He was hired by Robinhood in May 2020, and his previous job was at WilmerHale, a firm specializing in defending other firms against the SEC. This guy must be worth his weight in gold in avoiding regulatory fines for Robinhood.

DSingularity 5y ago
How do you value the stock options of a company that hasn’t had its IPO?
- jjice 5y ago
  Maybe off of current worth estimated after sale of shares to earlier investors? I'm not completely sure though.
- wfleming 5y ago
  Probably using the same fair market value that pre-IPO startups calculate to assess your tax liability when you exercise options.
- mdoms 5y ago
  Same way you do after an IPO. Based on the sale price of the stock.
- bhahn 5y ago
  You generally use 409a valuations, which increase in regularity and accuracy as the company matures (ie. gets bigger and closer to an actual IPO).
  - plank_time 5y ago
    As a former Uber employee, I assure you they do not become more accurate. It’s all based on funding rounds etc. The stock market is a different beast altogether.

nemothekid 5y ago

They went from 170MM in revenue in 2019 to 720MM in revenue in 2020. Wow will that be a temporary spike or sustained?

mrkramer 5y ago
Temporary; meme stocks and meme cryptocoins can not last forever.
- paxys 5y ago
  Sure but something else will come and replace them. Selling shovels is always a smart business move.
adam_arthur 5y ago
They count crypto sold as revenue. So that number is very misleading
dmode 5y ago
3 months ending 2021, they have already made ~500mn. This is sustained rocket ship

tester756 5y ago

I always wonder how many hours goes into creating & reviewing this big ass document also how careful you have to be to get this right

CapriciousCptl 5y ago

Per-user revenue was $109 for 2020. My goodness payment for order flow and cryptocurrency rebates are lucrative.

ok2938 5y ago
Funny that you are being played most, when you think you are in control.
- RobRivera 5y ago
  yea - everytime I try to explain to peers and family what the price of free is, deaf ears.
  - ivalm 5y ago
    It’s better than free, you get a discount relative to NBBO.
    - repsilat 5y ago
      The higher-level argument might be that if PFOF didn't exist, NBBO might be better. If Citadel et al wanted to make markets they'd have to publish their prices. (Of course, that gets rid of the "market segmentation" signals, so it'd probably make life a little better for institutions and make life a little worse for individuals, on net. No doubt smart people could disagree about how much of each effect there would be.)
      - ivalm 5y ago
        > that gets rid of the "market segmentation" signals Exactly, retail investors should basically be happy with PFOF.
  - missedthecue 5y ago
    I understand that Robinhood sells order flow and that you may get a worse fill because of it, but is the average Robinhood user getting 3 cents of slippage on their order of 1 share of Ford worse than a $10 round trip in order fees from a more premium broker on the same trade? I think the order flow model is better for most retail traders. Obviously, if you're buying $20k in stock at a time, paying the fees will be better, but that's not your average Robinhood user.

newfonewhodis 5y ago

Looks like the founders already sold $220M worth of stock: > 2019 Tender Offer > In August 2019, we entered into a letter agreement with certain holders of our capital stock, pursuant to which we agreed to waive certain transfer restrictions in connection with, and assist in the administration of, a tender offer that such holders proposed to commence. From August 2019 through September 2019, these holders commenced a tender offer to purchase shares of our capital stock from certain of our employee stockholders, including our Co-Founder and CEO, Vladimir Tenev, and Co-Founder and Chief Creative Officer and then-co-CEO Baiju Bhatt. An aggregate of 5.4 million shares of our capital stock were tendered pursuant to the tender offer for an aggregate purchase price of $67.6 million, or $12.4827 per share. > 2018 Secondary Sales > On April 3, 2018, our Co-Founder and CEO, Vladimir Tenev, our Co-Founder and Chief Creative Officer and then-co-CEO, Baiju Bhatt, our then-Chief Operating Officer, Nathan Rodland, and one other employee, each individually entered into common stock purchase agreements with certain other holders of our capital stock, including entities affiliated with DST Global, pursuant to which they sold shares of our common stock to the purchasing stockholders at a purchase price of $10.145 per share. In total, Mr. Bhatt sold 5,421,389 shares of common stock for an aggregate purchase price of $55.0 million; Mr. Rodland sold 295,712 shares of common stock for an aggregate purchase price of $3.0 million; and Mr. Tenev sold 5,421,389 shares of common stock for an aggregate purchase price of $55.0 million. As part of these sales, each of Mr. Bhatt and Mr. Tenev sold 739,280 shares of our common stock to entities affiliated with DST Global. What a joke. Founders got rich beyond imagination dumping all the risk on employees.

ffggvv 5y ago
“dumping all the risk” except it’s ipoing for far higher price than they got. so the employees are going to make far more per share than they did.

edoceo 5y ago

Hmm. Vice says the CEO (Vlad) had his phone seized - not for this thing but for the meme stock mess. Seems like a very big deal. https://www.vice.com/en/article/wx5p8z/feds-seized-robinhood-ceos-phone-in-gamestop-trading-halt-investigation https://www.vice.com/en/article/wx5p8z/feds-seized-robinhood...

ZoomerCretin 5y ago
I was called a conspiracy theorist only yesterday for claiming there was anything wrong with the restrictions. I’m glad to know numerous federal agencies share my views.
- jw1224 5y ago
  I don’t know why you’re getting downvoted… You’re not the only one. For some reason, defending hedge funds who’ve been blatantly manipulating the market seems, to draw a lot of vigorous defendants on here. https://prospect.org/power/how-the-gamestop-hustle-worked/ https://prospect.org/power/how-the-gamestop-hustle-worked/
- weird-eye-issue 5y ago
  There was literally a congressional hearing months ago about this. It's not like it's new that there is attention on this from the federal level.
- pgwhalen 5y ago
  Federal agencies investigating the situation does not mean they think there was anything wrong with it.

seanarnold 5y ago

Wow, I should become a Chief Legal Officer..

hsaliak 5y ago

Robbin’ Da Hood. The GameStop fiasco was unforgivable.

bern4444 5y ago

Alright, wsb has been waiting for this. Time to short (or buy puts) on Robinhood through Robinhood. Though Robinhood advanced 0 commission trading (though I think it was inevitable), it's a terrible platform.

MangoCoffee 5y ago

i have $22k in Robinhood as "play money" to trade and learn. i lost $400 on AMD calls. WSB said the first time is free but i didn't win at the Casino. after my first failed calls, i just buy and sell stock. i bought 600ish HP stocks when it was low and sell it too soon when HP stock went up. overall, Robinhood have the best UI compare to tdameritrade and it isn't too bad if you just do normal trade and not options. one thing that Robinhood did that disrupt the retail trade is their no fee. tdameritrade used to charge $7 to buy/sell stock.

Dopameaner 5y ago

its crazy how the CFO and CLO total compensation were 18m and 30m respectively.

deanmoriarty 5y ago

I am too lazy to go dig up the links, but there were many, many people on HN who declared Robinhood completely dead after they temporarily prevented users from transacting GME… they said they would either go bankrupt or users would just completely stop using them, and they were absolutely and comically convinced of that. HN should stick to programming opinions :-)

matt_s 5y ago
You didn’t live thru 1999-2001 then. Just cuz a company has an IPO doesn’t mean they have a viable business.

mherdeg 5y ago

Robinhood closed my brokerage account after I did transferred out assets (via ACATS transfer, to get a signup bonus with another brokerage without realizing capital gains). A few months later I asked how to reopen the account, using the "reopen account" form in their app to generate a support ticket. Three weeks later they sent an email saying that my account was permanently closed and I should apply for a new account. Replies to this email yielded a response saying that their email server was failing to accepting messages. So as requested I applied for a new account; the application stayed pending for three weeks, then I got an email autoreply telling me that my application is denied because I have a preexisting account (i.e. the old closed one). Replies to this email also yielded a response saying that their email server was failing to accepting messages. I filed a new support case explaining what had happened, what they told me to do, and asking what I should do next. No reply whatsoever.

XIVMagnus 5y ago
RH is basically shit. I immediately transferred out of RH during the whole GME craze when they froze trading
bob1029 5y ago
I went through this exact same scenario. Had to create another email address to get the 2nd account going. Total garbage experience.
- nvr219 5y ago
  Why did you want to go back there so bad?
  - bob1029 5y ago
    I maintain multiple brokerages. Fidelity, IBKR and Robinhood. The reason I keep RH around is because they have virtually zero restrictions around advanced trading. I basically put all my hyper-risky options stuff in the RH bucket. All my serious money lives elsewhere. I use RH pretty much exactly the way they want me to.
5y ago

signa11 5y ago

in other news this : https://www.vice.com/en/article/wx5p8z/feds-seized-robinhood-ceos-phone-in-gamestop-trading-halt-investigation https://www.vice.com/en/article/wx5p8z/feds-seized-robinhood...

anonu 5y ago

This is incredible on many fronts and I congratulate them. But I do need to reiterate my stance on this: they are a gambling company. The proof is in their own words in the S1: we are a safety first company. What Fintech firm says that? Nonetheless I'm sure they will continue to expand their product line away from gamification of day trading and into gamification of investing... A much better business.

jjeaff 5y ago
What does safety first even mean in that context? Do they mean safety of the company and/or end user? By danger, are they referencing the danger of losing all your money due to gambling it away? Or maybe avoiding suicides by making sure they always report correct balances?

rpmisms 5y ago

They should have waited longer. They just pissed off the internet.

lanbanger 5y ago

Yours. In size.

gregwebs 5y ago

RobinHood users should consider M1 Finance. It’s a better way to invest by allocating pies instead of making trades. However there are no options and they don’t offer OTC or anything low liquidity.