Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Robinhood stock trading app confirms $110M raise at $1.3B valuation

techcrunch.com

Post reply on HN
Print view View original

241–250 of 394 posts

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#241

Post by rtx »

cjslep wrote: post #79
problems wrote: post #28

Earlier quoted context omitted.

Depends what you want to do, I'm about 98% in plain old, boring index-tracking ETFs. But sometimes I want to take a bit of money to make some stupid bet. Yes, to gamble. And for that purpose, often having the leverage is a good thing. The way I see it, the bets are much more entertaining than those at casinos and with better odds. Maybe it's just me, but I find casinos incredibly boring, but gambling on the market ca…

I think the bigger problem is the erosion of the distinction between "investor" and "speculator", which is often unclear for novices entering the market (for whom Robinhood is significantly lowering the barrier for). Robinhood provides the firing range and a gun but no safety instructions. So I'm willing to bet you view this app very differently than someone who finds it on the App Store in a spur of the moment entic…

As the old saying goes, in the morning two kind of people enter the market. One with money, the other with experience. By evening they exchange positions.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#242

Post by webninja »

malanj wrote: post #10

My understanding is that if you trade through a platform like this, that's monetizing through order flow, you're getting screwed by HFTs. I.e. AFAIK Robinhood doesn't need to be selling the data to HFTs (which they don't do), for you to get screwed by them. Anyone here in the space who can quantify the "hidden" cost you incur because of more sophisticated traders trading against you? It feels like working with a brok…

Day trading is hazardous to your health and your wealth and more-so with the increase in HFTs. But the buy and hold for long-term strategy works very well. Use limit orders and you won't be paying any "hidden" costs.

For example, Lets say you put in a Market Order for 1 share of GOOG. Currently the price per share is about $900. It could fill immediately at $900, or it could fill immediately at $930 with that $30 premium. If instead, you place a Limit Order for 1 share of GOOG for $900.02, you will only buy 1 share of GOOG for $900.02 or less which effectively cuts out any "hidden" costs. Limit orders are almost always better.

Fun fact: All Robinhood market orders are actually placed as limit orders 5% above the market price. This is to limit investor risk.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#243

Post by usefulcat »

webninja wrote: post #215
huac wrote: post #64

Earlier quoted context omitted.

Robinhood knows that people can just buy index funds and sit (which is what I do). But this doesn't make money, so they encourage people to buy individual stocks, "whatever new Elon Musk stock is out there", and trade on leverage. To some extent they want to make Robinhood a game, rather than an investment platform.

Robinhood makes money off of uninvested capital and margin accounts, not trade commissions. So why would they care what we buy or whether we make purchases rarely or not?

According to TFA they also make money off of rebates, which are proportional to the number of shares traded.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#244

Post by AndrewKemendo »

lend000 wrote: post #181
AndrewKemendo wrote: post #177

Earlier quoted context omitted.

But the parent argument is going in the direction of "people shouldn't have the freedom to use this type of product." No, my comment was in the direction of: "It's bad if your core business is getting unsophisticated people making trades (bets) with credit." It's the same reason we all know it's a bad idea to give someone a 400k mortgage on an ARM when we don't know if they can pay it back or not. Great way to find y…

> It's bad if your core business is getting unsophisticated people making trades (bets) with credit I would agree, if there were evidence to support that primarily unsophisticated people are buying premium. However, I doubt this is the case (I'm sure someone will put together numbers on this eventually). I'm a competent trader who avoids leverage, simply because I don't want to pay for a membership (it's not just a l…

Which is exactly my point.

Based on what the stated publicly, it's in Robinhood's interest as a company to push everyone into Margin deals. Their core stated benefit of using Robinhood over other brokers is opening trading up to everyone, through ease and low carry to make it easy.

Ipso Facto that means their goal will be pushing new unsophisticated traders into leveraged deals. That is 100% implicit in this whole thing.

I'm not arguing that there is evidence that "primarily unsophisticated people are buying premium." I'm arguing that this is their plan going forward and it could be really really harmful to markets if they get to the scale they want to.

Best case, Robinhood can cover every margin call themselves, in which case they are effectively doing what Uber does which is unsustainably subsidizing investing on credit.

Worst case, they can't cover margin calls and neither can their users and they roll up.

I'm just waiting for them to allow leveraged shorts...

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#245

Post by rdxm »

pembrook wrote: post #110

Enticing millenials to "trade" individual stocks is quite possibly the most anti- Robinhood thing I can think of. The only thing more ironic would be to encourage them to take on margin...which as it turns out is literally Robinhood's business model. 99% of users on the platform will ulimately end up participating in a direct transfer of their own wealth to a more sophisticated trader or algo (i.e. The banks and hedg…

+ 100000000000

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#246

Post by zenlikethat »

guiomie wrote: post #224
pembrook wrote: post #110

Enticing millenials to "trade" individual stocks is quite possibly the most anti- Robinhood thing I can think of. The only thing more ironic would be to encourage them to take on margin...which as it turns out is literally Robinhood's business model. 99% of users on the platform will ulimately end up participating in a direct transfer of their own wealth to a more sophisticated trader or algo (i.e. The banks and hedg…

Out of my own ignorance on the subject of "buy some index funds": what happens when 50%, 75% or 90% of the market buys index funds? How will stocks be priced properly if no one is trading them directly?

The traditional answer is that the incentive to find and exploit market inefficiencies gets higher if more and more funds are parked in indexes (e.g., if $GE is underpriced due to excessive indexing, savvy investors will swoop in and buy up more stock in $GE, this bringing the market back to efficiency).

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#247

Post by uncensored »

So the SEC is ok with having non-accredited investors borrow money to gamble with? If it's so legit why isn't eTrade or Ameritrade et al doing it? I think the SEC should be investigated by Congress for throwing the common man (non-accredited investor) in front of the bus by not enforcing sane rules for investing.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#248

Post by Kerrick »

recursive wrote: post #200
SEJeff wrote: post #102

Earlier quoted context omitted.

Ask Jack Bogle... I'm sure he'll have a lesson or 5 for you.

I got here: http://johncbogle.com/wordpress/ But I'm not sure where to go to find information about the returns.

That's John Bogle. You're looking for Jack Bogle. https://www.bogleheads.org/wiki/Bogleheads%C2%AE_investment_...

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#249

Post by quotha »

rl3 wrote: post #211
lend000 wrote: post #115

Earlier quoted context omitted.

Wouldn't want to enable people to make their own decisions with their money, would we? The fact that you have to make a paid account to use leverage (whereas you can trade indefinitely for free) is deterrent enough for most people who do not already actively manage their investments. I think Robinhood is doing a great service -- I just wish they would expose a better API.

> Wouldn't want to enable people to make their own decisions with their money, would we? While we're on that subject, Pattern Day Trading restrictions[0] are a fine example of how arbitrary regulations created with good intentions can lead to negative outcomes. How it works is that margin accounts must maintain an equity balance of at least $25,000 in order to day trade freely. Otherwise, you're allotted three round-…

Agreed! life was great before these restrictions.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#250

Post by [deleted] »

harryh wrote: post #103
Leader2light wrote: post #21

I use Robinhood daily and love it. Low level traders could care less if HFT are making a penny off them. Also you can put limit orders....... No way I could trade the way I do and still make money if I was paying 7$ or more per trade. Crazy the industry can charge that much.

This is a good time to trot out that old tech company adage: if you aren't paying for the product, you are the product. How does Robinhood make money? By selling order flow to market makers. Why do market makers want Robinhood's order flow? Because Robinhood's customers are, collectively, unsophisticated investor with no particular knowledge about the future performance of a stock making them the perfect customers fo…

[deleted]
Post reply on HN