5 ms·

That is an insane drop. What is going on? Are they being outcompeted or simply not making money? Is their business model (being an easy to use broker for little

That is an insane drop. What is going on? Are they being outcompeted or simply not making money? Is their business model (being an easy to use broker for little people) simply not good?

nowherebeen 5y ago
There aren’t offering anything new and even frontrun their customers. And with the GameStop fiasco, I think a lot of people realizes it was a bad business model. I don’t think they will be able to recover. It will drop even more if a recession ever hits.
- qeternity 5y ago
  > and even frontrun their customers. Oh ffs no they don’t.
  - metadat 5y ago
    I thought RobinHood helped Citadel front run the orders? See https://www.washingtonpost.com/business/2021/01/29/robinhood-citadel-gamestop-reddit/ https://www.washingtonpost.com/business/2021/01/29/robinhood...
    - deleted 5y ago
      [deleted]
    - ac29 5y ago
      Payment for order flow is not front running (which is illegal).
      - mushbino 5y ago
        What is the order flow used for?
        colinmhayes 5y ago
        Citadel believes that they are less likely to lose money when they fill orders from retail investors. They're just paying for access to rubes, basically a finders fee.
- lupire 5y ago
  The front running is instead of a transaction fee. Customers have to pay for the service somehow.
- nly 5y ago
  They don't front-run orders. They still give best execution but they receive a small fee from market makers for sending orders their way. If both market maker A and market maker B offer the same price but B is going to pay them slightly more than A for your order, then they can legally route your order to B. Many brokers do this now. Front running is different entirely. For example, if you were about to buy a load of stock, front running would be Robinhood buying in before you, waiting for your order to clear the price level, and then selling a few ticks higher.
  - NovemberWhiskey 5y ago
    >They don't front-run orders. They still give best execution but they receive a small fee from market makers for sending orders their way. I really have most serious doubts about the idea that you can simultaneously get paid for order flow and deliver on your best execution obligations - the payment for order flow literally comes out of missed price improvement opportunities for the customer. FINRA seems to feel the same way and fired a warning shot over the bows last year: https://www.finra.org/rules-guidance/notices/21-23 https://www.finra.org/rules-guidance/notices/21-23
yhoneycomb 5y ago
Went from being the golden child of /r/wallstreetbets (literally every portfolio screenshot was of robin hood) to being villainized due to suspicious circumstances regarding locking people out of trading Gamestop "for their own good." Now any screenshot of robin hood is ridiculed.
- brian_herman 5y ago
  Yeah as soon as those orders weren't being filled and the ceo of robinhood was grilled by congress no one ever believed in them. On the discord there still people that use robinhood but most people use different brokers anyway like TD Ameritrade.
  - unmole 5y ago
    TD Ameritrade blocked trading in GME for the exact same reason as Robinhood.
  - angryasian 5y ago
    try Fidelity Beta app. Its just as good as RH
Sohcahtoa82 5y ago
My anecdata... I started trading on RH in 2019. They make investing simple and approachable for someone who like me who knew the basics and just wanted to play around a bit with some spare cash. But after a couple years when I want to start taking it more seriously, their platform has failed to grow and improve. In the three years I've used them, I can't think of a single new feature they added that I use. Meanwhile, there are plenty of things I'd like. For example, it's beyond ridiculous that price graphs don't have their axes labeled. When selling stock, it's always FIFO, so I can't choose which lots to sell to optimize tax liabilities. The problem is that I have a hard time leaving because their margin rates (~3%) are so damn good compared to the major players (8% or higher).
- lupire 5y ago
  RH is for trading (gambling, like you were doing) not investing.
- toomuchtodo 5y ago
  Good margin rates will be difficult to find in a rising interest rate environment. You can get lower rates from traditional brokers if you have a substantial net worth btw ($1MM+ AUM).
- reducesuffering 5y ago
  Interactive Brokers have always had the best margin rates: https://www.interactivebrokers.com/en/trading/margin-rates.php https://www.interactivebrokers.com/en/trading/margin-rates.p... Current max is 1.83% but the more you borrow it asymptotically approaches 1%. (subject to change, same as RH)
  - conanbatt 5y ago
    I made an account 5 months ago and i could not make margin work on IRB and customer was unressponsive. Acated into RH and got it instantly. Brokers are as behind compared to robinhood as car manufacturers are with RH. Its just not a great business.
  - toomuchtodo 5y ago
cwilkes 5y ago
Damn it was $70/share 8 months ago and now it is $10. Which means that a 4 year stock grant worth $700k then got you 10k shares. That’s now worth $100k
shakezula 5y ago
The entire market had a similar drop this week (especially today) and has been slow-burning for the last three months, so. Take it with a grain of salt.
lotsofpulp 5y ago
> Is their business model (being an easy to use broker for little people) simply not good? It is fine, it is just a low marginal commodity business not likely to achieve the grandiose valuations and size its investors expect.

That is an insane drop. What is going on? Are they being outcompeted or simply not making money? Is their business model (being an easy to use broker for little people) simply not good?

nowherebeen 5y ago

There aren’t offering anything new and even frontrun their customers. And with the GameStop fiasco, I think a lot of people realizes it was a bad business model. I don’t think they will be able to recover. It will drop even more if a recession ever hits.

qeternity 5y ago
> and even frontrun their customers. Oh ffs no they don’t.
- metadat 5y ago
  I thought RobinHood helped Citadel front run the orders? See https://www.washingtonpost.com/business/2021/01/29/robinhood-citadel-gamestop-reddit/ https://www.washingtonpost.com/business/2021/01/29/robinhood...
  - deleted 5y ago
    [deleted]
  - ac29 5y ago
    Payment for order flow is not front running (which is illegal).
    - mushbino 5y ago
      What is the order flow used for?
      - colinmhayes 5y ago
        Citadel believes that they are less likely to lose money when they fill orders from retail investors. They're just paying for access to rubes, basically a finders fee.
lupire 5y ago
The front running is instead of a transaction fee. Customers have to pay for the service somehow.
nly 5y ago
They don't front-run orders. They still give best execution but they receive a small fee from market makers for sending orders their way. If both market maker A and market maker B offer the same price but B is going to pay them slightly more than A for your order, then they can legally route your order to B. Many brokers do this now. Front running is different entirely. For example, if you were about to buy a load of stock, front running would be Robinhood buying in before you, waiting for your order to clear the price level, and then selling a few ticks higher.
- NovemberWhiskey 5y ago
  >They don't front-run orders. They still give best execution but they receive a small fee from market makers for sending orders their way. I really have most serious doubts about the idea that you can simultaneously get paid for order flow and deliver on your best execution obligations - the payment for order flow literally comes out of missed price improvement opportunities for the customer. FINRA seems to feel the same way and fired a warning shot over the bows last year: https://www.finra.org/rules-guidance/notices/21-23 https://www.finra.org/rules-guidance/notices/21-23

yhoneycomb 5y ago

Went from being the golden child of /r/wallstreetbets (literally every portfolio screenshot was of robin hood) to being villainized due to suspicious circumstances regarding locking people out of trading Gamestop "for their own good." Now any screenshot of robin hood is ridiculed.

brian_herman 5y ago
Yeah as soon as those orders weren't being filled and the ceo of robinhood was grilled by congress no one ever believed in them. On the discord there still people that use robinhood but most people use different brokers anyway like TD Ameritrade.
- unmole 5y ago
  TD Ameritrade blocked trading in GME for the exact same reason as Robinhood.
- angryasian 5y ago
  try Fidelity Beta app. Its just as good as RH

Sohcahtoa82 5y ago

My anecdata... I started trading on RH in 2019. They make investing simple and approachable for someone who like me who knew the basics and just wanted to play around a bit with some spare cash. But after a couple years when I want to start taking it more seriously, their platform has failed to grow and improve. In the three years I've used them, I can't think of a single new feature they added that I use. Meanwhile, there are plenty of things I'd like. For example, it's beyond ridiculous that price graphs don't have their axes labeled. When selling stock, it's always FIFO, so I can't choose which lots to sell to optimize tax liabilities. The problem is that I have a hard time leaving because their margin rates (~3%) are so damn good compared to the major players (8% or higher).

lupire 5y ago
RH is for trading (gambling, like you were doing) not investing.
toomuchtodo 5y ago
Good margin rates will be difficult to find in a rising interest rate environment. You can get lower rates from traditional brokers if you have a substantial net worth btw ($1MM+ AUM).
reducesuffering 5y ago
Interactive Brokers have always had the best margin rates: https://www.interactivebrokers.com/en/trading/margin-rates.php https://www.interactivebrokers.com/en/trading/margin-rates.p... Current max is 1.83% but the more you borrow it asymptotically approaches 1%. (subject to change, same as RH)
- conanbatt 5y ago
  I made an account 5 months ago and i could not make margin work on IRB and customer was unressponsive. Acated into RH and got it instantly. Brokers are as behind compared to robinhood as car manufacturers are with RH. Its just not a great business.
- toomuchtodo 5y ago

cwilkes 5y ago

Damn it was $70/share 8 months ago and now it is $10. Which means that a 4 year stock grant worth $700k then got you 10k shares. That’s now worth $100k

shakezula 5y ago

The entire market had a similar drop this week (especially today) and has been slow-burning for the last three months, so. Take it with a grain of salt.

lotsofpulp 5y ago

> Is their business model (being an easy to use broker for little people) simply not good? It is fine, it is just a low marginal commodity business not likely to achieve the grandiose valuations and size its investors expect.