Robinhood S-1 IPO • Hacker News Board

Re: Robinhood S-1 IPO

#191

Post by elliekelly » Thu, Jul 01, 2021, 10:30 PM UTC

sithlord wrote: post #28

tofuahdude wrote: post #13

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…

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.

Most companies that go public haven’t recently violated securities laws and most don’t readily admit that they’ll probably do it again. (But at least they’re truthful in their disclosure! As required.) They also have the boilerplate “this is a highly regulated industry” language as a separate risk:

> Our business is subject to extensive, complex and changing laws and regulations, and related regulatory proceedings and investigations. Changes in these laws and regulations, or our failure to comply with these laws and regulations, could harm our business.

This risk also stood out to me because it’s something I usually associate with SPACs:

> As a result of our recent settlement with the SEC, we are currently considered an “ineligible issuer,” which limits our ability to use certain free writing prospectuses in securities offerings and will delay our ability to qualify as a “well-known seasoned issuer” in the future.

SPACs are an ineligible issuer because they’ve been a blank check company, shell company, or penny stock issuer in the last three years. While I don’t have many nice things to say about SPACs the ineligible issuer language is pretty benign boilerplate in that situation.

RH, on the other hand, is an ineligible issuer because they were C&D’d by the SEC for violating the anti-fraud provisions of the federal securities laws in the last three years. Companies typically seek to avoid committing securities fraud in the run up to their IPO. So while the risk factor itself (not a WKSI) isn’t necessarily unusual the reason for the risk is and it speaks directly to management’s (at best) inability to appropriately manage the regulatory risk or (at worst) lack of trustworthiness.

Re: Robinhood S-1 IPO

#192

Post by m00x » Thu, Jul 01, 2021, 10:30 PM UTC

adabyron wrote: post #104

rburhum wrote: post #48

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, s…

People complain about unfair advantages regular "retail" people have but Robinhood has made access to stocks & options a lot easier. They've made it easy to get the cheapest rates possible on portfolio backed loans. They're starting to try & give some type of IPO access, although I can't comment on the value of that. If they start to offer IRAs & other tax advantaged accounts, plus a way for non accredited investors…

Retail investors could still invest using regular tools. Most banks have portals where you can buy/sell, but most of them safeguard against margin bets and they have much less sketchy practices.

Robinhood made it fancy and hid the complexities of investing so they could turn investing into a gambling platform.

Re: Robinhood S-1 IPO

#193

Post by bern4444 » Thu, Jul 01, 2021, 10:31 PM UTC

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.

Re: Robinhood S-1 IPO

#194

Post by s1artibartfast » Thu, Jul 01, 2021, 10:33 PM UTC

swarnie_ wrote: post #105

gberger wrote: post #75

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 j…

> In 2011-2015, Daniel Gallagher was 1 of 5 Commissioners of the SEC > his previous job was at WilmerHale, a firm specializing in defending other firms against the SEC. How is that situation even remotely legal?

Why wouldn't it be as long they follow the law in both jobs? It is like defense attorney becoming a prosecutor or an IRS employee becoming a tax advisor.

The best person to give advice on a subject are those who have experience on both sides.

Re: Robinhood S-1 IPO

#195

Post by bern4444 » Thu, Jul 01, 2021, 10:34 PM UTC

raziel2701 wrote: post #114

granzymes wrote: post #47

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%

Also the cash - liabilities calculus not looking good. $8.8B in cash - $7.7B in liabilties = - $1.1 billion I'll pass.

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

Re: Robinhood S-1 IPO

#196

Post by [deleted] » Thu, Jul 01, 2021, 10:37 PM UTC

8note wrote: post #187

ditonal wrote: post #90

Earlier quoted context omitted.

Index funds democratized investing. Robinhood “democratized” the worst part of investing and exposed unsophisticated investors to the instruments they are most likely to underperform on. Individual stock picking is probably worse than indexes but fine, however the incentive to day trade or trade complex derivatives is almost certainly going to hurt people far more often than a Vanguard account. It’s not a coincidence…

What do you mean when you say "democratized investing" ? That people can get benefits from the stock markets? Or that investment/economic decisions van be made democratically? Index funds rely on the the folks making the index to determine which stocks get bought -- who's on the s&P 500 is not a democratic process

[deleted]

Re: Robinhood S-1 IPO

#197

Post by ZoomerCretin » Thu, Jul 01, 2021, 10:38 PM UTC

edoceo wrote: post #180

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...

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.

Re: Robinhood S-1 IPO

#198

Post by tptacek » Thu, Jul 01, 2021, 10:38 PM UTC

ditonal wrote: post #90

rburhum wrote: post #48

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, s…

Index funds democratized investing. Robinhood “democratized” the worst part of investing and exposed unsophisticated investors to the instruments they are most likely to underperform on. Individual stock picking is probably worse than indexes but fine, however the incentive to day trade or trade complex derivatives is almost certainly going to hurt people far more often than a Vanguard account. It’s not a coincidence…

The problem with the conspiracy theory about Citadel forcing Robinhood to halt GME is that plenty of providers for whom Citadel wasn't most of their revenue also halted GME. There are other reasons this conspiracy is silly, but that fact seems to kill it pretty dead.

I don't like Robinhood and don't feel any need to apologize for it; I think they're predatory. But this isn't why.

"Fraud of the century" is pretty funny, though. Kudos.

Re: Robinhood S-1 IPO

#199

Post by tonfa » Thu, Jul 01, 2021, 10:39 PM UTC

wanderingmind wrote: post #175

yreg wrote: post #134

Earlier quoted context omitted.

I'm not saying we should be stopping them. But I also don't consider democratising and enabling gambling or taking drugs heroic. Similarly, I'm all for drinking alcohol yet wouldn't cheer for an innovation that would make people drink more. ---- That being said, I think that RH (and many other platforms) do in fact democratise investing (and that's great).

Do you consider legalising drugs as good for the society? Do you think drugs won't be advertised like how cigarettes and alcohol is being advertised. This is the price to live in a free society. You allow people to make their mistakes and live by its consequences.

> Do you think drugs won't be advertised like how cigarettes and alcohol is being advertised

Many countries ban advertizing for cigarettes. So while it's not banned the cost on society and public health is large enough that it's worth restricting advertizing.

I realize that likely seems totally weird for US folks, but that's really not weird at all in Europe. Same as regulating advertizing targeting kids, etc.

Re: Robinhood S-1 IPO

#200

Post by bern4444 » Thu, Jul 01, 2021, 10:39 PM UTC

s1artibartfast wrote: post #194

swarnie_ wrote: post #105

Earlier quoted context omitted.

> In 2011-2015, Daniel Gallagher was 1 of 5 Commissioners of the SEC > his previous job was at WilmerHale, a firm specializing in defending other firms against the SEC. How is that situation even remotely legal?

Why wouldn't it be as long they follow the law in both jobs? It is like defense attorney becoming a prosecutor or an IRS employee becoming a tax advisor. The best person to give advice on a subject are those who have experience on both sides.

Its not a good idea to allow heads of massive institutions to just hop around right after their tenure is over.

For one, it creates a negative incentive for the regulatory roles. Now people will seek to be head of the SEC just so they can score a specific job after. Incentives are misaligned.

Lots of private sector companies (especially law firms) include non-compete clauses for similar reasons. They want to prevent their former employees from leveraging their insider information against them.

An IRS employee becoming a tax advisor is one thing. The head (and more broadly executive level personnel) of the IRS becoming the head of accounting of a major firm is another.