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Robinhood reports 43% revenue decline

wsj.com

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Re: Robinhood reports 43% revenue decline

#21

Post by Miner49er »

ctvo wrote: post #13
woah wrote: post #9

Earlier quoted context omitted.

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.

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.

Some reasons to use Robinhood over Fidelity is they have cheaper margin, easier access to cryptocurrencies (well maybe not anymore), and easier access to options trading.

Re: Robinhood reports 43% revenue decline

#22

Post by foundart »

Justin_K wrote: post #8

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

There's a detailed and useful description of the order flow market from Bloomberg's Matt Levine at 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.

Re: Robinhood reports 43% revenue decline

#23

Post by leereeves »

Palmik wrote: post #11
kyriefh wrote: post #4

Earlier quoted context omitted.

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

They switched to reduce-only mode for GME, effectively going against the retail tide. The fact that other brokers did it is not an excuse. They should have known their user base better. And it's not like they did not have other options -- they could have posted more collateral, and given that they raised billions soon after, it was within the real of possibility for them.

> they could have posted more collateral, and given that they raised billions soon after, it was within the real [realm?] of possibility for them

Money they raised later couldn't have been used as collateral until they actually raised it, even if the investors would still invest under those conditions.

Re: Robinhood reports 43% revenue decline

#24

Post by jasode »

ryanmcbride wrote: post #2

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.

>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+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-c...

Re: Robinhood reports 43% revenue decline

#25

Post by rdtwo »

ryanmcbride wrote: post #2

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.

Seems like that’s a general trend. Netflix, Amazon Google all loosing goodwill from customers

Re: Robinhood reports 43% revenue decline

#26

Post by gretch »

woah wrote: post #9
ctvo wrote: post #5

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…

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.

Except robinhood suffers major security breaches (eg Nov 21) and then that information stolen on you can be used to hack your account. Sure the investment game is the same, but step 1 is to not get hacked.

Re: Robinhood reports 43% revenue decline

#27

Post by daniel-cussen »

kyriefh wrote: post #4
ryanmcbride wrote: post #2

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.

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

> 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.

So why did you start out saying they didn't lock trading...to then say they did lock trading? Do some people will only read the first fifteen words of your post? Like are you aiming to fill the air with positive-sounding sounds that make Robinhood sound good? You think we don't think?

Sometimes contradiction is good and helps with nuance and is meaningful. Here it's just gross, like I don't even have to quote two separate parts of what you said. But since I am entitled to quoting you twice to argue with you, but need no other piece of evidence, I'll just quote that same passage again.

> 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.

Re: Robinhood reports 43% revenue decline

#28

Post by dave5104 »

maneesh wrote: post #12

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.

> 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/

Re: Robinhood reports 43% revenue decline

#29

Post by kareemsabri »

leereeves wrote: post #23
Palmik wrote: post #11

Earlier quoted context omitted.

They switched to reduce-only mode for GME, effectively going against the retail tide. The fact that other brokers did it is not an excuse. They should have known their user base better. And it's not like they did not have other options -- they could have posted more collateral, and given that they raised billions soon after, it was within the real of possibility for them.

> they could have posted more collateral, and given that they raised billions soon after, it was within the real [realm?] of possibility for them Money they raised later couldn't have been used as collateral until they actually raised it, even if the investors would still invest under those conditions.

While I understand you can't post money you don't have, that doesn't absolve them of responsibility in their user's minds (nor should it).

Re: Robinhood reports 43% revenue decline

#30

Post by Miner49er »

avgDev wrote: post #10
kyriefh wrote: post #4

Earlier quoted context omitted.

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

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…

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).
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