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Robinhood reports 43% revenue decline

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Re: Robinhood reports 43% revenue decline

#101

Post by Denvercoder9 »

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…

It's not that bad of an analogy. When a toy store runs out of Furbies, that doesn't mean there's no Furbies available on the world market anymore. It just means that at that specific toy store you can't get any Furbies anymore. When they get resupplied (posted additional collateral, in the case of Robin Hood), you can buy from them again.

Re: Robinhood reports 43% revenue decline

#102

Post by thebean11 »

Majromax wrote: post #53
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.…

> If I sell GME to buy AMZN, does that have different collateral implications to selling GME to buy GME an hour later? Yes. Stock trades don't settle instantly, and brokers must put up collateral to ensure that parties don't walk away if the price moves against them between the order and the settlement. Thanks to the meme-stock volatility, DTCC (the clearing house) imposed special collateral requirements for Gamestop…

Ah TIL that the requirements would be different per-stock. It still seems to me that Robinhood should be able to fulfill orders for customers who had fully settled funds in the account. If I have money in my account (fresh from my bank account) that money is enough for 100% collateral.

Re: Robinhood reports 43% revenue decline

#103

Post by BigBubbleButt »

dragontamer wrote: post #99
BigBubbleButt wrote: post #98

Earlier quoted context omitted.

> 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.…

I am aware of that, and that is Robinhood being unable to manage their collateral requirements in order to continue trading GME. There were other brokers that managed to do it just fine. Robinhood messed up here. Really I think the DTCC is who messed up, but that's a much larger discussion.

The reason I dislike the analogy is because brokers aren't (typically) supposed to run out of shares to buy and sell. Retail traders don't think of trying different brokers for availability like you might trying different toy stores. The point of having a large enough float is so that you can continue trading the stock. Market makers exist to provide liquidity. It's supposed to keep trading, and only some brokers like Robinhood were unable to manage this.

Re: Robinhood reports 43% revenue decline

#104

Post by Kylekramer »

bombcar wrote: post #73
ceeplusplus wrote: post #51

Earlier quoted context omitted.

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.

Insane amounts of risk and long-term customers don’t usually go together.

Casinos do fine. Robinhood probably won't be the next Vanguard but they've essentially created the casual betting market version of investing.

Re: Robinhood reports 43% revenue decline

#105

Post by dragontamer »

BigBubbleButt wrote: post #103
dragontamer wrote: post #99

Earlier quoted context omitted.

> 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.…

I am aware of that, and that is Robinhood being unable to manage their collateral requirements in order to continue trading GME. There were other brokers that managed to do it just fine. Robinhood messed up here. Really I think the DTCC is who messed up, but that's a much larger discussion. The reason I dislike the analogy is because brokers aren't (typically) supposed to run out of shares to buy and sell. Retail tra…

Personally speaking, I blame the customers.

They are paying for $0 trades to a very, very small trading firm with well-known trade-execution problems months / years before the GME instance. No serious trader actually trusted Robinhood, and nobody was surprised when Robinhood's trading ability was shown to be so weak in that timeframe.

There were many respectable banks with much stronger finances who were able to support the GME-rush. It was just the small guys without much $$$$ who failed, like Robinhood.

--------

If you did a bit of research, you would have found Interactive Brokers (for instance). I'm not a customer of IB, but they have plenty of online material for what exactly you're paying for.

And that is, trade execution. It matters, especially in times of trouble / times of risk. The stronger the bank, the better their ability to continue operations during weird times.

> The reason I dislike the analogy is because brokers aren't (typically) supposed to run out of shares to buy and sell.

Except they do. All the time when bubbles pop and other crisis form. Good luck selling stocks during the crash of (whatever). When the stock market is crashing, there's no buyers, so the price keeps dropping and dropping.

Without any buyers, you will never be matched and you'll never be able to sell until its too late. Understanding these mechanics is very important to any market participant.

"Flash crashes" with stop-loss orders are particularly lulzy. Your stock is automatically put up for a sale on a flash-crash. There's no buyers, so you sell the stock at a grossly lower price than expected (when some savvy buyer finally decides the price is low enough). That's when you're matched up. By the time you look at the stock, the "flash crash" is over, your stock is randomly sold and at a bad price.

Etc. etc. Its annoying, but these sorts of events happen all the time, and its important to remember the mechanics of buying/selling stocks at all times when trading.

Re: Robinhood reports 43% revenue decline

#106

Post by jollybean »

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…

That's pretty reasonable.

Not allowing people 'out' is a pretty extreme measure and could cause serious financial distress.

Not allowing people to 'buy'? Then 'buy' somewhere else.

Behind the scenes issues aside, it's not an unreasonable policy.

Being 'Sold Out' of some hot commodity because of supply chain problems is a thing. You have to go next door to buy that thing. Returns? That's allowed.

I don't think they ever should have been in that position but I don't see the policy as deeply unfair.

Re: Robinhood reports 43% revenue decline

#107

Post by kodah »

dragontamer wrote: post #99
BigBubbleButt wrote: post #98

Earlier quoted context omitted.

> 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.…

Y'all are actually arguing two different things. You're saying it's unavoidable and understandable for a company of Robinhoods size. Let's also avoid calling retail stock buyers "meme-stock buyers", now a year removed from that whole event it's plain to see that many of those people were acting altruistically.

The other poster is saying outcomes matter more and that the perception and promises you make to users matter.

Both valid points, but Robinhood losing their ass to perception, their direct fault or being the victim of a crappy system, is just the way the cookie crumbles. There is a play here which Robinhood hasn't considered: own up to it and build a plan to be reliable to retail investors and use realistic messaging while doing so. Their CEO is apologized but they've failed to unveil how they intend to be an ally to retail investors in the future: https://news.yahoo.com/robinhood-ceo-apologizes-restricting-...

Re: Robinhood reports 43% revenue decline

#108

Post by Denvercoder9 »

dragontamer wrote: post #105
BigBubbleButt wrote: post #103

Earlier quoted context omitted.

I am aware of that, and that is Robinhood being unable to manage their collateral requirements in order to continue trading GME. There were other brokers that managed to do it just fine. Robinhood messed up here. Really I think the DTCC is who messed up, but that's a much larger discussion. The reason I dislike the analogy is because brokers aren't (typically) supposed to run out of shares to buy and sell. Retail tra…

Personally speaking, I blame the customers. They are paying for $0 trades to a very, very small trading firm with well-known trade-execution problems months / years before the GME instance. No serious trader actually trusted Robinhood, and nobody was surprised when Robinhood's trading ability was shown to be so weak in that timeframe. There were many respectable banks with much stronger finances who were able to supp…

IB might not be the best example, as they also restricted GME option trading to liquidation only.

Re: Robinhood reports 43% revenue decline

#109

Post by jollybean »

015a wrote: post #60
rurp wrote: post #47

Earlier quoted context omitted.

I don't know, not having enough collateral to fund normal operations seems like a failure on the company's part to me. It's not like the collateral was an unknown requirement, it's the normal way the system works. RH failed to adequitely plan for a surge in activity, which seems like an odd thing to blame retail trader ignorance on.

What happened last year was FAR from normal operations in the markets. What happened last year wasn't even a "surge in activity"; it was a hurricane. And, to be frank; Robinhood can obviously accept some blame, sure, but the financial settlement system is what almost bankrupt them. There's no good reason why transfers have to take four, now three, now two days to settle. Everyone in the industry knows this; but they'…

Is it really necessary for real productivity that we have instant transfers and trade on crazily priced equities?

What part of the real economy requires any of that?

I'm doubtful.

I wonder what a Tobin tax, and possibly even some kind of ban on high speed or even fast trading would do? i.e. throttling limitations? Or something to slow down the trading?

Would it affect the real economy and would the financial sector be prevented from creating value?

Or would it just mean some casino aspect of the operation is limited ...

I'm not suggesting we actually do that, because it's fine if people want to do those things so long as it doesn't affect the real economy with negative externalizations. But I wonder if it would be better for the system as a whole.

Re: Robinhood reports 43% revenue decline

#110

Post by notyourwork »

ceeplusplus wrote: post #51
lalos wrote: post #6

Earlier quoted context omitted.

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.

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.

Fidelity's offering is fine. I don't need confetti to confirm my trades.
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