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Robinhood stock trading app confirms $110M raise at $1.3B valuation

techcrunch.com

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Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#31

Post by pgodzin »

pillowkusis wrote: post #12

Pretty skeptical about the value here. >A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Users pay money to be loaned money? How is this different than a microloan service? >Robinhood also earns money from rebates its gets for directing its order flow to broker dealers That means, presumably, the dealers are profiting in some way by handling trades from in…

There are also other benefits that the Gold service provides, such as after-hours trading. As they become more feature-complete compared to established brokers, those new features will likely be exclusive to Gold members. I also think they are able to invest non-invested money in people's accounts for short-term small percentage gains

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#32

Post by supster »

jessriedel wrote: post #3

> Robinhood also earns money from rebates its gets for directing its order flow to broker dealers, though Bhatt insists “We do not sell data to anyone. We have never sold data to anyone. We just do not do that.” Just so everyone knows, order flow from unsophisticated investors is considered a valuable resource because, when filling it, you know that you're more informed than the person trading against you.

True, but all major retail brokers sell their order flows to HFTs (e.g. Etrade used to sell its order flow to Citadel), so this is nothing new

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#33

Post by omarforgotpwd »

joshdance wrote: post #6
jessriedel wrote: post #3

> Robinhood also earns money from rebates its gets for directing its order flow to broker dealers, though Bhatt insists “We do not sell data to anyone. We have never sold data to anyone. We just do not do that.” Just so everyone knows, order flow from unsophisticated investors is considered a valuable resource because, when filling it, you know that you're more informed than the person trading against you.

Can you extrapolate on order flow from unsophisticated investors? Why is it valuable?

In the London stock market they used to have a game where traders got a stack of pictures of girls, and had to rate each picture based on what they thought the average rating for each picture would be from everyone else. This essentially captures what stock trading is. It's not just about figuring out which company is the "prettiest girl" on the market, you have to be able to predict which girl everyone else is going to think is pretty in the future, because stock prices rise when a lot of people want to buy that stock and few people want to sell.

Order book data is valuable because it helps you figure out who everyone thinks is pretty, and retail investors make these decisions on much different factors than traders (I.e. Brand over financials)

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#34

Post by azag0 »

hammock wrote: post #22
AndrewKemendo wrote: post #16

“But ‘how are you going to make money long-term?’ has been a question mark” Bhatt says. Gold has answered that question.” A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Wow, so that's effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong? Even if you are a professional trader you'll take a bath on m…

Might be questionable for investors (although trading on margin is extremely common) but gambling seems to make a ton of money for casinos, betting parlors and lottery boards, many of which have been around for "long term." Sounds more like you have moral/personal objection.

Casinos do not make money on borrowing for gambling, but on gambling.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#35

Post by behrlich »

pillowkusis wrote: post #12

Pretty skeptical about the value here. >A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage Users pay money to be loaned money? How is this different than a microloan service? >Robinhood also earns money from rebates its gets for directing its order flow to broker dealers That means, presumably, the dealers are profiting in some way by handling trades from in…

The monthly fee for "gold" does seem a bit strange. But it gives you more than just margin. From https://support.robinhood.com/hc/en-us/articles/214681823-In... you also get instant settlement, instant deposit, and extended trading hours, which seems like something worth paying for.

As for "micro loans" - how is this any more predatory than a margin account at any other brokerage?

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#37

Post by brianwawok »

azag0 wrote: post #34
hammock wrote: post #22

Earlier quoted context omitted.

Might be questionable for investors (although trading on margin is extremely common) but gambling seems to make a ton of money for casinos, betting parlors and lottery boards, many of which have been around for "long term." Sounds more like you have moral/personal objection.

Casinos do not make money on borrowing for gambling, but on gambling.

It is very very common for Casinos to loan you money. This is how people often end up in debt by thousands (100s of thousands) of dollars to casinos, which causes all kinds of problems.

From the casino POV.. why limit their wins to what is in your pocket? Limit their win to what is in your pocket + what the risk model predicts they can make you pay back over time.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#38

Post by GeneralMayhem »

szirka wrote: post #30
rl3 wrote: post #2

Nice, now hopefully they can deliver on a public API, short selling, and a desktop app.

I would be pretty surprised if they introduced short selling. There's no question that a good chunk of Robinhood's user base are novice investors. Those that do not understand short selling may land themselves into a lot of a hot water. There may be measures RH could take to prevent novice users from dangerous short selling plays. I'd be curious to see how they introduce it.

They could introduce put options, at least.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#39

Post by omarforgotpwd »

Leader2light wrote: post #21

I use Robinhood daily and love it. Low level traders could care less if HFT are making a penny off them. Also you can put limit orders....... No way I could trade the way I do and still make money if I was paying 7$ or more per trade. Crazy the industry can charge that much.

Same exact situation here. Because I put in lots of relatively small dollar value trades $10 transaction fees at TD Ameritrade would eat all my profits pretty quickly.

Re: Robinhood stock trading app confirms $110M raise at $1.3B valuation

#40

Post by ohstopitu »

AdamN wrote: post #29
omarforgotpwd wrote: post #23

Earlier quoted context omitted.

Margin trading is a pretty standard feature across all brokerages. Dangerous if used ignorantly, but greatly increases you returns if used effectively.

And regulated - you have to be approved for margin trading by the brokerage.

I thought it was based on the % you traded?

So for example, if I was using an 100k account to trade, I had another 100k of leverage no?

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