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Robinhood reports 43% revenue decline

174 points by thm 5y ago

ryanmcbride 5y ago
I feel like regardless of the reasons they did it, whether or not it was necessary, they lost a lot of good faith with the users when they locked the GME and crypto trading during that whole thing. I have no idea how necessary their actions were but regardless of its necessity it still cost a lot of user good will.
- andrewgioia 5y ago
  Whether it was right for them to do or not, I left their platform because of it paying their ridiculous $79 transfer fee or whatever it was. Now with Fidelity and have recommended them 3 times since I've switched.
  - mirceal 5y ago
    Fidelity is the one I also use and recommended. The other one is maybe Schwab but the rest of them are 50 shades of Robinhood. If anyone else knows other serious, professional brokers do correct me.
    - Fomite 5y ago
      I'd add Vanguard to Schwab and Fidelity. But actually helping retail investors isn't particularly sexy.
- kyriefh 5y ago
  this is a good example of the importance of comms and user education. robinhood didn't lock trading - or at the very least, they were far from the only brokerage to do so and had very little choice in the matter. however, they were the front end that uninformed users experienced it through and thus took a huge PR hit
  - avgDev 5y ago
    Robinhood thrived initially because they targeted uneducated investors. I downloaded the app, and the confetti explosion after stock purchase really turned me off. They wanted to make it fun. They wanted to target the dopamine receptors targeted by gambling. All people who I interact with who are investing with robinhood have very little knowledge of the financial system. I hate making a generalization, but after the whole scandal it seems that robinhood investors were/are in fact not very knowledgeable about how trading works.
    - Miner49er 5y ago
      Yeah, but how are those uneducated investors supposed to learn? Robinhood lowered the barrier to entry to actually allow the normal person to invest/trade. Without it, I would know far less about the financial system then I do now. For me, Robinhood really did live up what it aims to do (democratize finance for all).
      - Fomite 5y ago
        Schwab will happily teach you, and then provide you access to the tools, rather than just asking you to install an app with instant push-button access to potentially life-ruining downside risk.
      - jjav 5y ago
        > Yeah, but how are those uneducated investors supposed to learn? By being presented with learning material on how trading works, instead of trying to hide reality behind a pretty GUI? That'd be my choice. For example on TDAmeritrade you only get a cash account by default, no margin or option trading. You can upgrade and there are multiple levels of margin upgrades in increasing steps of risk. To do an upgrade you have to at least read some material and answer some questions and check boxes. Sure you could lie through it, but at least they make it clear you're signing up for ever increasing risk at every level. When I first read that RobinHood was allowing people margin and option trading without even telling customers that those are enabled and what it means, I always felt it can only end badly.
  - 5y ago
- jasode 5y ago
  >I have no idea how necessary their actions were It was financially unavoidable for Robinhood because they didn't have the _extra_ billions$ in collateral deposited at the clearinghouse to back up their customers' trades (e.g. GME). Various stories about it having to raise extra billions in an emergency: https://www.google.com/search?q=robinhood+emergency+raise+billions https://www.google.com/search?q=robinhood+emergency+raise+bi... But retail traders (not the professional traders like George Soros) don't understand that the "Robinhood smartphone app" is a leaky abstraction over final trade settlement at traditional clearing houses. The real-world aspect that "leaked out" was that Robinhood didn't have enough billions in cash. So the ramifications to the UI/UX (the stuff the smartphone user sees) is that you can't transact GME. All that "trade settlement accounting" is too much complexity for non-professionals to understand so the easier narrative to believe is that Robinhood was part of a conspiracy theory to screw the little guy. Yes, being underfunded made them look bad. **EDIT to add extra link explaining why Robinhood has to post their own collateral to buy stocks on behalf of their customers: https://money.stackexchange.com/questions/136272/why-would-collateral-be-required-to-make-a-stock-purchase https://money.stackexchange.com/questions/136272/why-would-c...
  - dnadler 5y ago
    I don't know that I'd lay the blame at retail traders not being sophisticated enough to understand this. I'd lay the blame with the company that had such poor risk controls that they allowed this to happen in the first place.
    - gruez 5y ago
      >I don't know that I'd lay the blame at retail traders not being sophisticated enough to understand this. I'm not sure how you got the impression that the parent comment was laying the blame on the user. I interpreted it as excusing the behavior of robinhood. Blame isn't a zero sum game, it's possible to argue that robinhood is less blameworthy without saying that the retail traders are to blame. >I'd lay the blame with the company that had such poor risk controls that they allowed this to happen in the first place. What risk controls? As per the parent comment, it's an issue with settlement/collateral requirements, and robinhood not being prepared to satisfy them in light of a stock going 10x in a short period of time. I'm not sure how "risk controls" would have helped.
- rdtwo 5y ago
  Seems like that’s a general trend. Netflix, Amazon Google all loosing goodwill from customers
- thawaya3113 5y ago
  They did it so they wouldn’t collapse financially. And probably lose all licenses and privileges to make trades for the foreseeable future, ending them as a company.
- PragmaticPulp 5y ago
  I would be shocked if the GME / Reddit crowd made up more than a few percent of that decline. Robinhood has a lot of users across a lot of demographics. Reddit, however large, is more of a small microcosm of internet culture. I think it's more likely that Robinhood's rapid rise was fueled by COVID boredom and a wonky stock market where it felt like everyone was getting rich from stocks and options. Now that the market is cooling off and a lot of their new users got burned when they learned that the market doesn't always go up, I suspect a lot of them are losing enthusiasm for frequent trading. They did their IPO at just the right time.
  - mirceal 5y ago
    I would not be shocked. We need to consider who would use Robinhood to begin with and how likely are they to know be exposed to the whole GME saga. Personally I stopped using it. Had it for trying out new things / prototyping crazy ideas (yeah yeah disposable income and first world problems I now). From that point on I am using only a legit broker. When I want to trade I want to be able to trade. If you as a broker cannot do that - even under weird conditions - I will NOT use you. Also, at a meta level, the problem is that RH massaged the truth and didn’t straight up explain what was going on. If they did the right thing in keeping everyone in the loop this could have been a golden opportunity to consolidate their position.
  - at-fates-hands 5y ago
    >> I think it's more likely that Robinhood's rapid rise was fueled by COVID boredom. Agreed. The half dozen people I know who were kind of on the back end of this before they locked up trading made some money off it. Not a lot, but nothing to sneeze at either. Once the whole saga went nuclear, they decided to close out their accounts. Most waited for everything to settle out, sold off all their positions and cashed out. They haven't been back. It feels a lot like a normal trading cycle. I'm sure the same thing would've eventually happened where people found something else that caught their attention, but the whole GME saga I think speed up a lot of people into other things. COVID had a weird effect where people found a lot of things to do they normally would not have been doing. Now that things have subsided somewhat, people are moving on from those things and going back to the activities and hobbies they were doing pre-COVID.
- bushbaba 5y ago
  Isn't a large portion of their past revenue from Crypto trading. Which is significantly down from prior usage.
- djyaz1200 5y ago
  That action reinforced the exact opposite of the narrative they were trying to create with the Robinhood name. Instead of stealing from the rich and giving to the poor they were running a casino where if you win too much they stop the game.
- parkingrift 5y ago
  I understand why they did, and why they had to do it. And I still don't care. I liquidated my RH positions and left the platform forever. Unfair is unfair.
- quickthrowman 5y ago
  It was 100% necessary, they didn’t have the necessary cash to post margin with the clearinghouse. They would’ve been a failed brokerage if they kept allowing GME trades without being able to post the required margin, the SEC would’ve taken it over and people would’ve had to wait weeks/months to ACATS their shares and cash to another brokerage. Does that sound like a better outcome for Robinhood users? I didn’t think so.
bombcar 5y ago
Much of what Robinhood actually added (an app) has been mimicked and copied by actual brokerages. And having your investment platform be basically synonymous with wallstreetbets isn’t that great.
- lalos 5y ago
  Fidelity iOS app even has a beta toggle that sprinkles that UI/UX competitive advantage that Robinhood pioneered in the space. Anyhow, I wonder how much revenue decline is expected post-IPO, one would assume that they hyper-optimize KPIs 1-2 years before IPO to have good metrics and then those strategies do not continue in the longer term.
  - ceeplusplus 5y ago
    I've used Fidelity's new UX, as well as Vanguard's, and both are still way behind Robinhood in terms of just usability, nevermind addictiveness. Robinhood also makes it easy to take on insane amounts of risk through options and margin whereas that kind of leverage is difficult to achieve elsewhere.
    - bombcar 5y ago
      Insane amounts of risk and long-term customers don’t usually go together.
      - Kylekramer 5y ago
        Casinos do fine. Robinhood probably won't be the next Vanguard but they've essentially created the casual betting market version of investing.
    - notyourwork 5y ago
      Fidelity's offering is fine. I don't need confetti to confirm my trades.
      - 5y ago
ctvo 5y ago
What an interesting business model. Regardless of what Robinhood aspires to be, its target demographic used it for easy speculation. Access to options trading with as little friction as possible and meme coins, for example. When most speculators lose their money, who remains on the platform? Is anyone using Robinhood for long term financial investment? Add in mistrust from your users (GME, AMC, et al) and increasing competition from the more "reputable" services that have made trading on mobile easier and it doesn't look great. There's similarities to casinos and bookmakers, except those folks controlled the odds and could entice customers +/- as needed to bring in traffic. Robinhood doesn't have that option.
- woah 5y ago
  There's no reason not to use it for long term financial investment. I don't think your money is any safer or less safe between different brokerages. They rode a fad to greatly increase market share. The fad is ebbing, but I'm guessing they are still in a much better spot than they were in 2019.
  - ctvo 5y ago
    Why would you though? What's the advantage of using Robinhood vs. say Fidelity which your 401K and other investments are already on? Robinhood executed on a few things well, one of which was how mobile friendly and low friction it was to execute trades. Long term investment doesn't require that. Pseudo day trading from work and speculating? Yes.
    - bombcar 5y ago
      Robinhood added fractional shares before other brokers (and some still don’t have them) which is a minor advantage I guess.
      - 8ytecoder 5y ago
        Instant Deposits & Withdraw. Access to detailed MorningStar analysis for just $5/mo. (May be other brokerages have started matching Robinhood but the one I use ETrade still takes 2 full days to settle and then another 3 days to withdraw cash. It also takes 2-3 working days to deposit cash. So if you spot a buying opportunity you can't. Or, you'd always keep cash lying around and ready in the account.)
thedrbrian 5y ago
https://archive.ph/2022.04.28-225015/https://www.wsj.com/amp/articles/robinhood-earnings-loom-after-stock-tumble-layoffs-11651170909 https://archive.ph/2022.04.28-225015/https://www.wsj.com/amp...
Justin_K 5y ago
This is what happens when your clients come to realize they're getting screwed in exchange for "free" trades. Search "robin hood order flow".
- kareemsabri 5y ago
  PFOF is not "screwing" them - it costs on average less than brokerage fees before Robinhood existed. I would venture most people would prefer a bit of a spread on their orders to paying several dollars when they execute a sale.
- asdff 5y ago
  The vast majority of investors are not trading enough money for these minute scrapings to add up to anything at all. OTOH TD ameritrade et all were charging you $7.99 a trade or whatever hustle they had people forced into previously.
  - rchaud 5y ago
    That isn't much money at all for retail customers that any sane financial planner would advise to buy and hold. Or put some into an ETF or mutual find each month. It's mostly an issue with people making multiple trades each day who won't spring for the premium plans.
  - gamblor956 5y ago
    Only if you were below the minimum asset threshold, which varied between $500 and $1000 over the past decade. I've used TD Ameritrade for over a decade and haven't paid a fee to them for trades in nearly as long.
- foundart 5y ago
  There's a detailed and useful description of the order flow market from Bloomberg's Matt Levine at https://archive.ph/kgApm https://archive.ph/kgApm. I don't think it's accurate to say RH clients were getting screwed on order flow. They were getting less of the order flow benefit in exchange for no-fee trades.
- 5y ago
maneesh 5y ago
I applied for a Robinhood account and was never approved, after sending in details 3-4 times. Now, I find out from my bank, that Robinhood leaked my SSN, Drivers License#, Address, and Email to the dark web. WTF!!!! Is there any recourse here? My SSN is now all over the dark web.
- Miner49er 5y ago
  Sounds like you probably got phished?
  - cevn 5y ago
    I wouldn't be surprised if a RH employee sold the info. Something similar happened to me with their "Robinhood Card" and many others. Fraudulent purchases being made when the card never left our possession. Either a database breach or their access controls are not good. Either way IMO you should not be involved with this company..
- dave5104 5y ago
  > Is there any recourse here? Freeze your credit reports at the 3 bureaus. And start checking your credit report on a regular basis at: https://www.annualcreditreport.com/ https://www.annualcreditreport.com/
m1117 5y ago
Lol. Lol? They have best margin.
buildbuildbuild 5y ago
I’m a big believer in their future. As soon as they release their native crypto deposit/withdraw functionality beyond beta (it’s amazing), Robinhood will be the first true crypto exchange with an attached U.S. bank account. [1] That means no transfer times between banks and an exchange. Deposit and sell crypto, instantly spend fiat on their debit card. Deposit your paycheck ACH, withdraw crypto to your own wallet. Lack of a stablecoin is its only current blind spot. It’s a game changer and very few people are understanding this, including in the marketing department at Robinhood. They need to plaster “Now an exchange, with a bank account.” ads on crypto news sites. [1] Square Cash almost counts but I discount them due to only supporting BTC - a fault of their founder’s BTC maximalism belief.
- flywithit 5y ago
  Even supposing all that cryptocurrency integration brought on a lot of profit, I don’t think it secures their future because other platforms can just copy it.
- xur17 5y ago
  Coinbase has a U.S. bank account with a debit card, and there are a number of other smaller companies with similar products.
- bastardoperator 5y ago
  None of this sounds game changing to me. I can get a coinbase card, but don't actually want one of those either. I think their days are numbered given the steep revenue declines.
deleted 5y ago
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strangus 5y ago
dehrmann 5y ago
A lot of recent earnings reports that make the headlines boil down to people not staying at home like they did in 2020. Less Netflix, less Pelaton, less shopping on Amazon, less punting.
jmyeet 5y ago
The one thing I have to give Robinhood credit for is the good marketing that appealed to Zoomers and the WSB crowd. But, much like Crytpo Andys, a lot of these people just don't understand how anything works. Take the GME short squeeze, which a lot of people still fundamentally misunderstand. RH allowed (allows?) you to sign up, promise to deposit funds and trade on credit, essentially, until those funds arrive (typically in no less than 3 days). That settlement process dind't go away. RH just abosrbed the risk. That's fine when the market is normal. Some people might buy GE and others might sell GE so it all evens out. By this I mean the default risk to RH is mitigated (but still real). The problem with GME is everyone was buying in a short space of time to the point RH had to borrow billions to cover the collateral requirements to the point it was risking making the company insolvent. That's how extreme it was. So what happens if people sign up, buy GME on credit and then GME crashes? RH is left holding the bag. That was the problem. It's also why GME blocked further purchases bu tallowed sales because sales decreased their overall risk no matter where they came from. But no, how things actually work is ignored in favor of the system protecting hedge funds. Personally I don't use any free brokerage because of the order flow issue, which is to say that all your orders are sold to hedge funds and that's where RH makes it's money. Just like with free online services that sell advertising: you are the product. It's so wild to me that people bitch about the evils of advertising but accept without question the selling of order flow, which is directtly taking money from your pockets. Crazy. It's even crazier when you consider that the aforementioned evil hedge funds supposedly protecting GME short sellers are directly funding and benefitting from RH order flow but they get no flak for that. You can only get away from not knowing how the underlying thing works. It'll eventually come back to bite you in the ass.
- kasey_junk 5y ago
  Until recently every US broker accepted payment for order flow (even Vanguard did for options). Only Robinhood gave you back the money in the form of free trades. Thats to be commended. Payment for order flow is a complex topic, mostly because the incentives are tricky, but at the end of the day, unless you are doing gigantic block trades (which you’d hire a specialist to do) you are almost certainly paying less in slippage with PFOF than you are in fees.
klipklop 5y ago
You guys forget they also did the same thing blocking Nokia stock buys. Don’t tell me they didn’t have enough to cover that. It had a fraction of the GME madness. I am not wealthy, but I have more stock than the average person. I moved all of it out of RH. Will never trust them again. I am sure there was thousands of little guys like myself that bailed. The idea that they blocked sales just long enough for the r/wsb crowd to panic sell and then restore buying was pretty suspect. I know they claimed liquidity problems, but it sure seemed to benefit groups that bet on the other side of the GME bubble. Note I am not bitter about losing money on GME. I didn’t.
- vincentmarle 5y ago
  Yep once you lose the trust, it’s over. There’s plenty of players out there that can offer the same.
werber 5y ago
I used the app briefly during the Gamestop hype, and am not a savvy investor by any means. But the press circus surrounding it in the aftermath made me feel like I had used an online slot machine not an investing application.
- zydex 5y ago
  In my opinion it's closer to the former rather than the latter.
- turtledove 5y ago
  > online slot machine not an investing application. These things are the same. Different front end UX, maybe, but if you are taking WSB advice then these two things are the same.
stjohnswarts 5y ago
This was expected after the collapse of the meme-stock reddit phenomena.

174 points by thm 5y ago

I feel like regardless of the reasons they did it, whether or not it was necessary, they lost a lot of good faith with the users when they locked the GME and crypto trading during that whole thing. I have no idea how necessary their actions were but regardless of its necessity it still cost a lot of user good will.

andrewgioia 5y ago
Whether it was right for them to do or not, I left their platform because of it paying their ridiculous $79 transfer fee or whatever it was. Now with Fidelity and have recommended them 3 times since I've switched.
- mirceal 5y ago
  Fidelity is the one I also use and recommended. The other one is maybe Schwab but the rest of them are 50 shades of Robinhood. If anyone else knows other serious, professional brokers do correct me.
  - Fomite 5y ago
    I'd add Vanguard to Schwab and Fidelity. But actually helping retail investors isn't particularly sexy.
kyriefh 5y ago
this is a good example of the importance of comms and user education. robinhood didn't lock trading - or at the very least, they were far from the only brokerage to do so and had very little choice in the matter. however, they were the front end that uninformed users experienced it through and thus took a huge PR hit
- avgDev 5y ago
  Robinhood thrived initially because they targeted uneducated investors. I downloaded the app, and the confetti explosion after stock purchase really turned me off. They wanted to make it fun. They wanted to target the dopamine receptors targeted by gambling. All people who I interact with who are investing with robinhood have very little knowledge of the financial system. I hate making a generalization, but after the whole scandal it seems that robinhood investors were/are in fact not very knowledgeable about how trading works.
  - Miner49er 5y ago
    Yeah, but how are those uneducated investors supposed to learn? Robinhood lowered the barrier to entry to actually allow the normal person to invest/trade. Without it, I would know far less about the financial system then I do now. For me, Robinhood really did live up what it aims to do (democratize finance for all).
    - Fomite 5y ago
      Schwab will happily teach you, and then provide you access to the tools, rather than just asking you to install an app with instant push-button access to potentially life-ruining downside risk.
    - jjav 5y ago
      > Yeah, but how are those uneducated investors supposed to learn? By being presented with learning material on how trading works, instead of trying to hide reality behind a pretty GUI? That'd be my choice. For example on TDAmeritrade you only get a cash account by default, no margin or option trading. You can upgrade and there are multiple levels of margin upgrades in increasing steps of risk. To do an upgrade you have to at least read some material and answer some questions and check boxes. Sure you could lie through it, but at least they make it clear you're signing up for ever increasing risk at every level. When I first read that RobinHood was allowing people margin and option trading without even telling customers that those are enabled and what it means, I always felt it can only end badly.
- 5y ago
jasode 5y ago
>I have no idea how necessary their actions were It was financially unavoidable for Robinhood because they didn't have the _extra_ billions$ in collateral deposited at the clearinghouse to back up their customers' trades (e.g. GME). Various stories about it having to raise extra billions in an emergency: https://www.google.com/search?q=robinhood+emergency+raise+billions https://www.google.com/search?q=robinhood+emergency+raise+bi... But retail traders (not the professional traders like George Soros) don't understand that the "Robinhood smartphone app" is a leaky abstraction over final trade settlement at traditional clearing houses. The real-world aspect that "leaked out" was that Robinhood didn't have enough billions in cash. So the ramifications to the UI/UX (the stuff the smartphone user sees) is that you can't transact GME. All that "trade settlement accounting" is too much complexity for non-professionals to understand so the easier narrative to believe is that Robinhood was part of a conspiracy theory to screw the little guy. Yes, being underfunded made them look bad. **EDIT to add extra link explaining why Robinhood has to post their own collateral to buy stocks on behalf of their customers: https://money.stackexchange.com/questions/136272/why-would-collateral-be-required-to-make-a-stock-purchase https://money.stackexchange.com/questions/136272/why-would-c...
- dnadler 5y ago
  I don't know that I'd lay the blame at retail traders not being sophisticated enough to understand this. I'd lay the blame with the company that had such poor risk controls that they allowed this to happen in the first place.
  - gruez 5y ago
    >I don't know that I'd lay the blame at retail traders not being sophisticated enough to understand this. I'm not sure how you got the impression that the parent comment was laying the blame on the user. I interpreted it as excusing the behavior of robinhood. Blame isn't a zero sum game, it's possible to argue that robinhood is less blameworthy without saying that the retail traders are to blame. >I'd lay the blame with the company that had such poor risk controls that they allowed this to happen in the first place. What risk controls? As per the parent comment, it's an issue with settlement/collateral requirements, and robinhood not being prepared to satisfy them in light of a stock going 10x in a short period of time. I'm not sure how "risk controls" would have helped.
rdtwo 5y ago
Seems like that’s a general trend. Netflix, Amazon Google all loosing goodwill from customers
thawaya3113 5y ago
They did it so they wouldn’t collapse financially. And probably lose all licenses and privileges to make trades for the foreseeable future, ending them as a company.
PragmaticPulp 5y ago
I would be shocked if the GME / Reddit crowd made up more than a few percent of that decline. Robinhood has a lot of users across a lot of demographics. Reddit, however large, is more of a small microcosm of internet culture. I think it's more likely that Robinhood's rapid rise was fueled by COVID boredom and a wonky stock market where it felt like everyone was getting rich from stocks and options. Now that the market is cooling off and a lot of their new users got burned when they learned that the market doesn't always go up, I suspect a lot of them are losing enthusiasm for frequent trading. They did their IPO at just the right time.
- mirceal 5y ago
  I would not be shocked. We need to consider who would use Robinhood to begin with and how likely are they to know be exposed to the whole GME saga. Personally I stopped using it. Had it for trying out new things / prototyping crazy ideas (yeah yeah disposable income and first world problems I now). From that point on I am using only a legit broker. When I want to trade I want to be able to trade. If you as a broker cannot do that - even under weird conditions - I will NOT use you. Also, at a meta level, the problem is that RH massaged the truth and didn’t straight up explain what was going on. If they did the right thing in keeping everyone in the loop this could have been a golden opportunity to consolidate their position.
- at-fates-hands 5y ago
  >> I think it's more likely that Robinhood's rapid rise was fueled by COVID boredom. Agreed. The half dozen people I know who were kind of on the back end of this before they locked up trading made some money off it. Not a lot, but nothing to sneeze at either. Once the whole saga went nuclear, they decided to close out their accounts. Most waited for everything to settle out, sold off all their positions and cashed out. They haven't been back. It feels a lot like a normal trading cycle. I'm sure the same thing would've eventually happened where people found something else that caught their attention, but the whole GME saga I think speed up a lot of people into other things. COVID had a weird effect where people found a lot of things to do they normally would not have been doing. Now that things have subsided somewhat, people are moving on from those things and going back to the activities and hobbies they were doing pre-COVID.
bushbaba 5y ago
Isn't a large portion of their past revenue from Crypto trading. Which is significantly down from prior usage.
djyaz1200 5y ago
That action reinforced the exact opposite of the narrative they were trying to create with the Robinhood name. Instead of stealing from the rich and giving to the poor they were running a casino where if you win too much they stop the game.
parkingrift 5y ago
I understand why they did, and why they had to do it. And I still don't care. I liquidated my RH positions and left the platform forever. Unfair is unfair.
quickthrowman 5y ago
It was 100% necessary, they didn’t have the necessary cash to post margin with the clearinghouse. They would’ve been a failed brokerage if they kept allowing GME trades without being able to post the required margin, the SEC would’ve taken it over and people would’ve had to wait weeks/months to ACATS their shares and cash to another brokerage. Does that sound like a better outcome for Robinhood users? I didn’t think so.

bombcar 5y ago

Much of what Robinhood actually added (an app) has been mimicked and copied by actual brokerages. And having your investment platform be basically synonymous with wallstreetbets isn’t that great.

lalos 5y ago
Fidelity iOS app even has a beta toggle that sprinkles that UI/UX competitive advantage that Robinhood pioneered in the space. Anyhow, I wonder how much revenue decline is expected post-IPO, one would assume that they hyper-optimize KPIs 1-2 years before IPO to have good metrics and then those strategies do not continue in the longer term.
- ceeplusplus 5y ago
  I've used Fidelity's new UX, as well as Vanguard's, and both are still way behind Robinhood in terms of just usability, nevermind addictiveness. Robinhood also makes it easy to take on insane amounts of risk through options and margin whereas that kind of leverage is difficult to achieve elsewhere.
  - bombcar 5y ago
    Insane amounts of risk and long-term customers don’t usually go together.
    - Kylekramer 5y ago
      Casinos do fine. Robinhood probably won't be the next Vanguard but they've essentially created the casual betting market version of investing.
  - notyourwork 5y ago
    Fidelity's offering is fine. I don't need confetti to confirm my trades.
    - 5y ago

ctvo 5y ago

What an interesting business model. Regardless of what Robinhood aspires to be, its target demographic used it for easy speculation. Access to options trading with as little friction as possible and meme coins, for example. When most speculators lose their money, who remains on the platform? Is anyone using Robinhood for long term financial investment? Add in mistrust from your users (GME, AMC, et al) and increasing competition from the more "reputable" services that have made trading on mobile easier and it doesn't look great. There's similarities to casinos and bookmakers, except those folks controlled the odds and could entice customers +/- as needed to bring in traffic. Robinhood doesn't have that option.

woah 5y ago
There's no reason not to use it for long term financial investment. I don't think your money is any safer or less safe between different brokerages. They rode a fad to greatly increase market share. The fad is ebbing, but I'm guessing they are still in a much better spot than they were in 2019.
- ctvo 5y ago
  Why would you though? What's the advantage of using Robinhood vs. say Fidelity which your 401K and other investments are already on? Robinhood executed on a few things well, one of which was how mobile friendly and low friction it was to execute trades. Long term investment doesn't require that. Pseudo day trading from work and speculating? Yes.
  - bombcar 5y ago
    Robinhood added fractional shares before other brokers (and some still don’t have them) which is a minor advantage I guess.
    - 8ytecoder 5y ago
      Instant Deposits & Withdraw. Access to detailed MorningStar analysis for just $5/mo. (May be other brokerages have started matching Robinhood but the one I use ETrade still takes 2 full days to settle and then another 3 days to withdraw cash. It also takes 2-3 working days to deposit cash. So if you spot a buying opportunity you can't. Or, you'd always keep cash lying around and ready in the account.)

thedrbrian 5y ago

https://archive.ph/2022.04.28-225015/https://www.wsj.com/amp/articles/robinhood-earnings-loom-after-stock-tumble-layoffs-11651170909 https://archive.ph/2022.04.28-225015/https://www.wsj.com/amp...

Justin_K 5y ago

This is what happens when your clients come to realize they're getting screwed in exchange for "free" trades. Search "robin hood order flow".

kareemsabri 5y ago
PFOF is not "screwing" them - it costs on average less than brokerage fees before Robinhood existed. I would venture most people would prefer a bit of a spread on their orders to paying several dollars when they execute a sale.
asdff 5y ago
The vast majority of investors are not trading enough money for these minute scrapings to add up to anything at all. OTOH TD ameritrade et all were charging you $7.99 a trade or whatever hustle they had people forced into previously.
- rchaud 5y ago
  That isn't much money at all for retail customers that any sane financial planner would advise to buy and hold. Or put some into an ETF or mutual find each month. It's mostly an issue with people making multiple trades each day who won't spring for the premium plans.
- gamblor956 5y ago
  Only if you were below the minimum asset threshold, which varied between $500 and $1000 over the past decade. I've used TD Ameritrade for over a decade and haven't paid a fee to them for trades in nearly as long.
foundart 5y ago
There's a detailed and useful description of the order flow market from Bloomberg's Matt Levine at https://archive.ph/kgApm https://archive.ph/kgApm. I don't think it's accurate to say RH clients were getting screwed on order flow. They were getting less of the order flow benefit in exchange for no-fee trades.
5y ago

maneesh 5y ago

I applied for a Robinhood account and was never approved, after sending in details 3-4 times. Now, I find out from my bank, that Robinhood leaked my SSN, Drivers License#, Address, and Email to the dark web. WTF!!!! Is there any recourse here? My SSN is now all over the dark web.

Miner49er 5y ago
Sounds like you probably got phished?
- cevn 5y ago
  I wouldn't be surprised if a RH employee sold the info. Something similar happened to me with their "Robinhood Card" and many others. Fraudulent purchases being made when the card never left our possession. Either a database breach or their access controls are not good. Either way IMO you should not be involved with this company..
dave5104 5y ago
> Is there any recourse here? Freeze your credit reports at the 3 bureaus. And start checking your credit report on a regular basis at: https://www.annualcreditreport.com/ https://www.annualcreditreport.com/

m1117 5y ago

Lol. Lol? They have best margin.

buildbuildbuild 5y ago

I’m a big believer in their future. As soon as they release their native crypto deposit/withdraw functionality beyond beta (it’s amazing), Robinhood will be the first true crypto exchange with an attached U.S. bank account. [1] That means no transfer times between banks and an exchange. Deposit and sell crypto, instantly spend fiat on their debit card. Deposit your paycheck ACH, withdraw crypto to your own wallet. Lack of a stablecoin is its only current blind spot. It’s a game changer and very few people are understanding this, including in the marketing department at Robinhood. They need to plaster “Now an exchange, with a bank account.” ads on crypto news sites. [1] Square Cash almost counts but I discount them due to only supporting BTC - a fault of their founder’s BTC maximalism belief.

flywithit 5y ago
Even supposing all that cryptocurrency integration brought on a lot of profit, I don’t think it secures their future because other platforms can just copy it.
xur17 5y ago
Coinbase has a U.S. bank account with a debit card, and there are a number of other smaller companies with similar products.
bastardoperator 5y ago
None of this sounds game changing to me. I can get a coinbase card, but don't actually want one of those either. I think their days are numbered given the steep revenue declines.

deleted 5y ago

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strangus 5y ago

dehrmann 5y ago

A lot of recent earnings reports that make the headlines boil down to people not staying at home like they did in 2020. Less Netflix, less Pelaton, less shopping on Amazon, less punting.

jmyeet 5y ago

The one thing I have to give Robinhood credit for is the good marketing that appealed to Zoomers and the WSB crowd. But, much like Crytpo Andys, a lot of these people just don't understand how anything works. Take the GME short squeeze, which a lot of people still fundamentally misunderstand. RH allowed (allows?) you to sign up, promise to deposit funds and trade on credit, essentially, until those funds arrive (typically in no less than 3 days). That settlement process dind't go away. RH just abosrbed the risk. That's fine when the market is normal. Some people might buy GE and others might sell GE so it all evens out. By this I mean the default risk to RH is mitigated (but still real). The problem with GME is everyone was buying in a short space of time to the point RH had to borrow billions to cover the collateral requirements to the point it was risking making the company insolvent. That's how extreme it was. So what happens if people sign up, buy GME on credit and then GME crashes? RH is left holding the bag. That was the problem. It's also why GME blocked further purchases bu tallowed sales because sales decreased their overall risk no matter where they came from. But no, how things actually work is ignored in favor of the system protecting hedge funds. Personally I don't use any free brokerage because of the order flow issue, which is to say that all your orders are sold to hedge funds and that's where RH makes it's money. Just like with free online services that sell advertising: you are the product. It's so wild to me that people bitch about the evils of advertising but accept without question the selling of order flow, which is directtly taking money from your pockets. Crazy. It's even crazier when you consider that the aforementioned evil hedge funds supposedly protecting GME short sellers are directly funding and benefitting from RH order flow but they get no flak for that. You can only get away from not knowing how the underlying thing works. It'll eventually come back to bite you in the ass.

kasey_junk 5y ago
Until recently every US broker accepted payment for order flow (even Vanguard did for options). Only Robinhood gave you back the money in the form of free trades. Thats to be commended. Payment for order flow is a complex topic, mostly because the incentives are tricky, but at the end of the day, unless you are doing gigantic block trades (which you’d hire a specialist to do) you are almost certainly paying less in slippage with PFOF than you are in fees.

klipklop 5y ago

You guys forget they also did the same thing blocking Nokia stock buys. Don’t tell me they didn’t have enough to cover that. It had a fraction of the GME madness. I am not wealthy, but I have more stock than the average person. I moved all of it out of RH. Will never trust them again. I am sure there was thousands of little guys like myself that bailed. The idea that they blocked sales just long enough for the r/wsb crowd to panic sell and then restore buying was pretty suspect. I know they claimed liquidity problems, but it sure seemed to benefit groups that bet on the other side of the GME bubble. Note I am not bitter about losing money on GME. I didn’t.

vincentmarle 5y ago
Yep once you lose the trust, it’s over. There’s plenty of players out there that can offer the same.

werber 5y ago

I used the app briefly during the Gamestop hype, and am not a savvy investor by any means. But the press circus surrounding it in the aftermath made me feel like I had used an online slot machine not an investing application.

zydex 5y ago
In my opinion it's closer to the former rather than the latter.
turtledove 5y ago
> online slot machine not an investing application. These things are the same. Different front end UX, maybe, but if you are taking WSB advice then these two things are the same.

stjohnswarts 5y ago

This was expected after the collapse of the meme-stock reddit phenomena.