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Robinhood reports 43% revenue decline

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Re: Robinhood reports 43% revenue decline

#131

Post by vmception »

dragontamer wrote: post #66
dangerlibrary wrote: post #64

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. 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…

> "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…

You're missing the point on behalf of some other people that are missing the point. If they didn't have the conflict of interest it would have been obvious to them that they needed to disable sells as well as the buys. Just freeze the stock, instead of only considering the freezing of the buys as a mere technicality while being pushed towards the convenience of keeping sells open. The point is for them to think of their users and balance decisions with what users would think.

Re: Robinhood reports 43% revenue decline

#132

Post by BigBubbleButt »

dragontamer wrote: post #124
BigBubbleButt wrote: post #111

Earlier quoted context omitted.

> 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…

> Market halts are completely different from what we are discussing I'm not talking about market halts. I'm saying when all the buy-orders vanish from the marketplace, it results in a "flash crash". Hitting the "sell" button will do really weird things at these times. After all, a "sell" can only mechanically happen if the market pairs you up with a "buy". That's just how the stock market works. If there's no buyers,…

Then what you're saying makes even less sense. Because what happened with Robinhood is they turned off the buy button, but still people could sell (which means there were buyers from other brokers or outside retail).

I realize every buy needs a sell. I also said "typically" and considering there obviously were buyers since you could still sell, everything you're saying is irrelevant to the discussion we had about GME in 2021.

Anyway, we're not getting anywhere. You can respond but I'm not responding anymore.

Re: Robinhood reports 43% revenue decline

#133

Post by Fomite »

Miner49er wrote: post #30
avgDev wrote: post #10

Earlier quoted context omitted.

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).

Schwab will happily teach you, and then provide you access to the tools, rather than just asking you to install an app with instant push-button access to potentially life-ruining downside risk.

Re: Robinhood reports 43% revenue decline

#134

Post by Fomite »

codyb wrote: post #58
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.

I'm not sure "understanding your user base better" makes billions of dollars appear in your bank accounts instantly, but I'm not a market maker so who knows

Arguably, knowing your user base is by and large fairly unsophisticated investors who still want to be able to bet big on meme stocks suggests you should probably be building a substantial dragon horde-scale reserve for surges like this.

Re: Robinhood reports 43% revenue decline

#135

Post by dragontamer »

vmception wrote: post #131
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…

You're missing the point on behalf of some other people that are missing the point. If they didn't have the conflict of interest it would have been obvious to them that they needed to disable sells as well as the buys. Just freeze the stock, instead of only considering the freezing of the buys as a mere technicality while being pushed towards the convenience of keeping sells open. The point is for them to think of th…

> If they didn't have the conflict of interest it would have been obvious to them that they needed to disable sells as well as the buys.

Why? Robinhood wanted more GME for themselves so that they can sell it to other customers, who were furiously buying up GME to the point that Robinhood ran out of GME to sell.

-------

That's like a Gamestop banning used PS5 during Christmas. Erm... wait, you want to sell me your used PS5 when no one else can get it? Sure, I'll buy it from you (and immediately resell it within 5 minutes).

The problem is that there's this *myth*, this *conspiracy* where a cabal of shadowy people were "owned" by the noble Redditors / meme-stonk buyers who saved the world... and people who participated in the myth want to be seen as the "good guys".

But in actuality, they're jumping at shadows and inventing boogiemen, and fundamentally misunderstanding the situation.

I mean, whatever. Its what people do and it happens all the time. But Imma call people's idiocy out when it happens. For people who actually want to understand the GME event, feel free to read the GME report from the SEC: https://www.sec.gov/page/sec-staff-release-gamestop-report

And stay away from the meme-stonk myths. Those guys don't know what they're talking about.

Re: Robinhood reports 43% revenue decline

#136

Post by WoahNoun »

dangerlibrary wrote: post #68
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…

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…

Not doing it would have resulted in Robinhood being declared insolvent and entered into receivership at the close of trading day. All investment accounts would have been frozen for at least a year as the insolvency is unwound. Financial firms (including brokerages) don't go through "bankruptcy" like other corporations. They are liquidated during the nightly clearing process.

The SEC report says the short squeeze drove the initial price action, but retail attempting to chase the short squeeze drove the majority of the price increase when RH was shutting down trading. (Graph on page 28 or 29 of the SEC report shows this).

Re: Robinhood reports 43% revenue decline

#137

Post by Fomite »

mirceal wrote: post #128
andrewgioia wrote: post #96

Earlier quoted context omitted.

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.

Fidelity is the one I also use and recommended. The other one is maybe Schwab but the rest of them are 50 shades of Robinhood. If anyone else knows other serious, professional brokers do correct me.

I'd add Vanguard to Schwab and Fidelity.

But actually helping retail investors isn't particularly sexy.

Re: Robinhood reports 43% revenue decline

#138

Post by winenbug »

thebean11 wrote: post #102
Majromax wrote: post #53

Earlier quoted context omitted.

> 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.

Assuming that the average meme-stock chaser trades with settled funds, though.

Re: Robinhood reports 43% revenue decline

#139

Post by winenbug »

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

Instant deposits are definitely not settled funds from your account -> Robinhood perspective.

Re: Robinhood reports 43% revenue decline

#140

Post by Fomite »

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.

"both are still way behind Robinhood in terms of ... addictiveness."

Good.

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