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Robinhood reports 43% revenue decline

wsj.com

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Re: Robinhood reports 43% revenue decline

#111

Post by BigBubbleButt »

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…

> Except they do. All the time when bubbles pop and other crisis form.

Market halts are completely different from what we are discussing. And one of the purposes of market makers is to provide liquidity in extreme cases as you are describing (I'm not saying it works perfectly, but it's one of their reasons for existing).

Anyway, I feel like we aren't quite getting our points across to each other. Not blaming you just saying let's agree to disagree.

Re: Robinhood reports 43% revenue decline

#112

Post by dragontamer »

Denvercoder9 wrote: post #108
dragontamer wrote: post #105

Earlier quoted context omitted.

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.

> option trading

Options are extremely different than the underlying stock.

Options is everything we discussed except with way less volume and way more margin requirements.

It doesn't seem like IB restricted GME-stock, only options-on-GME-stock, which is a very, very different instrument.

------

That being said, if I were a paying customer to IB and was hoping for good options-trades during that time, I guess I would have been pissed off. Still though, its a far more understandable issue to have a derivative-trade fall through rather than the underlying stock-trade fall through.

Re: Robinhood reports 43% revenue decline

#113

Post by klipklop »

You guys forget they also did the same thing blocking Nokia stock buys. Don’t tell me they didn’t have enough to cover that. It had a fraction of the GME madness.

I am not wealthy, but I have more stock than the average person. I moved all of it out of RH. Will never trust them again.

I am sure there was thousands of little guys like myself that bailed.

The idea that they blocked sales just long enough for the r/wsb crowd to panic sell and then restore buying was pretty suspect. I know they claimed liquidity problems, but it sure seemed to benefit groups that bet on the other side of the GME bubble.

Note I am not bitter about losing money on GME. I didn’t.

Re: Robinhood reports 43% revenue decline

#114

Post by djyaz1200 »

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.

That action reinforced the exact opposite of the narrative they were trying to create with the Robinhood name. Instead of stealing from the rich and giving to the poor they were running a casino where if you win too much they stop the game.

Re: Robinhood reports 43% revenue decline

#115

Post by timdev2 »

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…

I sold GME for a tidy profit on RH while buying was disallowed. Not hypothetically; I really did. Are you saying RH should have forced me to hodl? How would that have been a better customer experience?

Re: Robinhood reports 43% revenue decline

#116

Post by werber »

I used the app briefly during the Gamestop hype, and am not a savvy investor by any means. But the press circus surrounding it in the aftermath made me feel like I had used an online slot machine not an investing application.

Re: Robinhood reports 43% revenue decline

#117

Post by Denvercoder9 »

dragontamer wrote: post #112
Denvercoder9 wrote: post #108

Earlier quoted context omitted.

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

> option trading Options are extremely different than the underlying stock. Options is everything we discussed except with way less volume and way more margin requirements. It doesn't seem like IB restricted GME-stock, only options-on-GME-stock, which is a very, very different instrument. ------ That being said, if I were a paying customer to IB and was hoping for good options-trades during that time, I guess I would…

Yes, but the end result was still the same: customers couldn't trade what they wanted to, because the broker couldn't or didn't satisfy their collateral requirements.

Re: Robinhood reports 43% revenue decline

#118

Post by bpicolo »

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.

You used to be able to move funds into vanguard + purchase in a single submission in Vanguard (though clearly multiple steps on their end).

The new app seems to only offer sending money to money market settlement, before waiting two days to transact.

A real pain of a change, unless I'm missing a way to do it.

Re: Robinhood reports 43% revenue decline

#119

Post by colinmhayes »

bidirectional wrote: post #86
colinmhayes wrote: post #46

Earlier quoted context omitted.

Robinhood is legally obligated to provide users with the lowest spread they can find. They make money because market makers are willing to pay robinhood to bring them customers who get the exact same price as everyone else. The market makers do this because they realize robinhood users are schmucks who are more likely to lose money than other investors.

No, they do it because they know the flow from Robin Hood isn't toxic. It's not about them losing money (market makers hold flat positions, they don't care what happens beyond the immediate future) but about them not being more informed about immediate market moves. If an asset manager wants to buy treasuries for hedging purposes, or an ETF manager wants to buy equities to rebalance, they are also uninformed from the…

> market makers hold flat positions

They certainly try to, but they do experience some delta in the short run. They are definitely scared of wild swings that happen between them filling an order and flattening their delta.

Re: Robinhood reports 43% revenue decline

#120

Post by [deleted] »

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.

[deleted]
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