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Robinhood reports 43% revenue decline

wsj.com

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Re: Robinhood reports 43% revenue decline

#91

Post by dillondoyle »

bombcar wrote: post #3

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.

Seems correct.

Looking at the scwhab 2020 pdf i could find quickly they added ~4.6mm new brokerage accounts between 19 and 20. Wonder what the recent stats are.

Article says robinhood lost 1.8mm if i'm reading correct.

Fits my use. I did a small amount on robinhood when i first came out. Now have that small pot for active trading (compared to people here i'm sure) in schwab.

I am also considering moving the larger savings i have in wealthfront to schwab. But i'm afraid of my impulsivity. About 10% of my savings are in a schwab account i actively trade on. Down like 20% over the last 360 days lol. Despite 1% fee my IRA is like doubled - though a much longer timeframe. I did put my 2021 tax IRA into new account on schwab. 80% medium risk ETFs. and just bought ttt and some bull levered etfs. lol. too impulsive.

If schwab had a setting to automate or place holds so I couldn't sell for ___ in my IRA I would move it all. Maybe i'll open a second account different login so it doesn't show up on the app/website.

Re: Robinhood reports 43% revenue decline

#92

Post by ar_lan »

dangerlibrary wrote: post #64
jasode wrote: post #24

Earlier quoted context omitted.

>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 l…

"Not being able to transact GME" is one thing, but they disabled the ability to buy, and kept the ability to sell. It wasn't a symmetric freeze - it was a deliberate action that could only have one outcome on the stock price. It doesn't matter what the reason is - underfunded collateral or otherwise. The experience they provided to their customers was "you can only sell this stock, nobody can buy it." That's not thei…

It's bizarre to me how many people really seem to have sided with Robinhood on this and blame the consumer's for being "too dumb to understand the reality of what happened."

Situations occur, and usually customers are receptive if they are given heads up and a reason why. But Robinhood just completely subverted their customer's expectations rapidly and unexpectedly. The entire purpose of their app is TO abstract away the complicated world of stock trading - and they failed to live up to that goal during the GME saga. So I don't get why people are going against the customers whose expectations were set by Robinhood and coming to the defense of Robinhood themselves.

Robinhood offered a product. They clearly showed they can't deliver on the expectation most consumers desire. People vote with their money, and are leaving Robinhood (I cancelled in favor of Fidelity in February 2021). It's fine, it's how capitalism works.

Re: Robinhood reports 43% revenue decline

#93

Post by gruez »

bidirectional wrote: post #78
dangerlibrary wrote: post #68

Earlier quoted context omitted.

I'm not confused why they did what they did. I understand the situation they were in. I'm saying they shouldn't have done it, and that there is an obvious conflict of interest when there's a short squeeze on hedge funds going on, and Robin Hood's paying customers are hedge funds. Stock freezes happen. They are, all things considered, fairly routine affairs. This was not a stock freeze - it was a company that got out…

They only did what they were forced to. Making an active choice to arbitrarily restrict selling as well would have been an insane move -- who are they to tell their customers they cannot sell something they own?

>who are they to tell their customers they cannot sell something they own?

To be fair exchanges do that all the time (ie. trading halts).

Re: Robinhood reports 43% revenue decline

#94

Post by bushbaba »

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.

Isn't a large portion of their past revenue from Crypto trading. Which is significantly down from prior usage.

Re: Robinhood reports 43% revenue decline

#95

Post by gruez »

wonnage wrote: post #81
sandworm101 wrote: post #43

Earlier quoted context omitted.

>> just stop letting customers trade with unsettled funds. I can think of nothing an app-based brokerage could do that would anger customers more. The entire point of the app is to facilitate quick and easy trading. The job of the app providers is to abstract away all of the backroom accounting. Requiring customers to wait for settlement would cause a riot.

You can't trade with unsettled funds, it's an SEC violation

Only in cash accounts. Margin accounts (which I think all robinhood accounts are?) don't have that limitation.

Re: Robinhood reports 43% revenue decline

#96

Post by andrewgioia »

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.

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.

Re: Robinhood reports 43% revenue decline

#97

Post by dragontamer »

kareemsabri wrote: post #76
dragontamer wrote: post #66

Earlier quoted context omitted.

> "Not being able to transact GME" is one thing, but they disabled the ability to buy, and kept the ability to sell. It wasn't a symmetric freeze - it was a deliberate action that could only have one outcome on the stock price. Because Robinhood didn't have enough margin to keep buying GME. But if you sold GME, that reduced the margin Robinhood had to keep. ------- In other words: Robinhood has no more money to buy G…

This is another way of saying Robinhood did not have the capital reserves required to fulfill their obligations as a broker-dealer to their customers. Also, it is not correct that they "didn't have enough money to buy GME". Restricting trading of GME was a choice they made to post less collateral, which they didn't have.

> Also, it is not correct that they "didn't have enough money to buy GME". Restricting trading of GME was a choice they made to post less collateral, which they didn't have.

Collateral in this case is just a fancy word meaning "money".

Re: Robinhood reports 43% revenue decline

#98

Post by BigBubbleButt »

dragontamer wrote: post #88
dangerlibrary wrote: post #68

Earlier quoted context omitted.

I'm not confused why they did what they did. I understand the situation they were in. I'm saying they shouldn't have done it, and that there is an obvious conflict of interest when there's a short squeeze on hedge funds going on, and Robin Hood's paying customers are hedge funds. Stock freezes happen. They are, all things considered, fairly routine affairs. This was not a stock freeze - it was a company that got out…

> I'm saying they shouldn't have done it They had no choice. They literally couldn't obtain any more GME stock. You cannot squeeze blood out of a stone. What do you want Robinhood to do? The GME situation got into a "sold out" situation. Much like how a toy-store runs out of Furbies back in the 90s, Robinhood ran out of GME-stock to sell to its customers. They would allow "selling", because Robinhood can then obtain…

> The GME situation got into a "sold out" situation. Much like how a toy-store runs out of Furbies back in the 90s, Robinhood ran out of GME-stock to sell to its customers.

This is a poor analogy. So long as there is a large enough float, which is a requirement to be listed on some exchanges, there should always be stock to buy and sell.

Don't compare it to something else that's commonplace and misleading. I am aware of the margin requirements and what happened with DTCC and am purposefully avoiding that more complicated subject only to point out how much I dislike your analogy.

Re: Robinhood reports 43% revenue decline

#99

Post by dragontamer »

BigBubbleButt wrote: post #98
dragontamer wrote: post #88

Earlier quoted context omitted.

> I'm saying they shouldn't have done it They had no choice. They literally couldn't obtain any more GME stock. You cannot squeeze blood out of a stone. What do you want Robinhood to do? The GME situation got into a "sold out" situation. Much like how a toy-store runs out of Furbies back in the 90s, Robinhood ran out of GME-stock to sell to its customers. They would allow "selling", because Robinhood can then obtain…

> The GME situation got into a "sold out" situation. Much like how a toy-store runs out of Furbies back in the 90s, Robinhood ran out of GME-stock to sell to its customers. This is a poor analogy. So long as there is a large enough float, which is a requirement to be listed on some exchanges, there should always be stock to buy and sell. Don't compare it to something else that's commonplace and misleading. I am aware…

> This is a poor analogy. So long as there is a large enough float, which is a requirement to be listed on some exchanges, there should always be stock to buy and sell.

Robinhood didn't have the money / collateral to obtain any more shares.

As far as Robinhood is concerned, GME was sold out for that time period. It really is actually that simple. No shares for Robinhood meaning no new shares for Robinhood customers.

In 2 days time, Robinhood T+2 settlements occurred and everything cleared up. Except the meme-stock buyers already lost interest because they had the attention span of gnats.

> how much I dislike your analogy.

Care to explain why its a bad analogy? The only meaningful difference I can think of is the whole T+2 settlement thing (but that's very much like "The next delivery of Furbies is in 2 days", yall can buy Furbies then). Perhaps this is stretching the analogy too far now but... the fundamental situation seems to be solid.

Re: Robinhood reports 43% revenue decline

#100

Post by thebean11 »

sandworm101 wrote: post #43
thebean11 wrote: post #31

Earlier quoted context omitted.

They had enough money to cover users' trades in securities other than GME, though, right? If I sell GME to buy AMZN, does that have different collateral implications to selling GME to buy GME an hour later? If I send them a bank transfer for $10k, they should have that money as soon as it clears right? There are many other ways they could have handled it beyond halting buying (and buying only) in an individual stock.…

>> just stop letting customers trade with unsettled funds. I can think of nothing an app-based brokerage could do that would anger customers more. The entire point of the app is to facilitate quick and easy trading. The job of the app providers is to abstract away all of the backroom accounting. Requiring customers to wait for settlement would cause a riot.

> I can think of nothing an app-based brokerage could do that would anger customers more.

Disagree, I think this would have angered customers less than what actually happened..

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