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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

#81

Post by jsudhams »

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…

Doesn't most brokers already provide up to 7 to 10 time leverage for intraday and 2 to 3 times for future?

Atleast in india every broker provides that.

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

#83

Post by saget »

x2f10 wrote: post #62

I've been interested in Robinhood for some time. Does anybody here have experience with the app (good or bad) they can share?

I've used it for both about 6 months and it's wonderful. Very easy and nice to use. Only complaint is there is no features to explore stocks and financial news but there are other apps for that

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

#84

Post by sigstoat »

user5994461 wrote: post #55
brianwawok wrote: post #37

Earlier quoted context omitted.

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.

Casino have truly insane margin on the money you play with them (and equally truly insane revenues). When they lend you money, they know exactly how much of that will go back to their hands soon (and they have a ton of cash flow to cover). Robinhood is effectively lending money with little guarantee to take anything back and no source of income.

> Robinhood is effectively lending money with little guarantee to take anything back and no source of income.

i have not looked into robinhood's margin offering, so maybe it's very different, but in my other brokerage accounts, margin works something like this:

i buy $10k of SPY. after the trade closes, the broker says "ok, you own $10k of SPY, and that's good for another $5k of margin." so then i can go buy another $5k of whatever i want. i pay 9% interest or so on that $5k. if SPY drops in value "enough", the broker can on a moment's notice, sell as much of the SPY as they want to cover my debts.

so... they've got a great guarantee they can take it all back.

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

#85

Post by austenallred »

eugeniub wrote: post #78
austenallred wrote: post #70

Earlier quoted context omitted.

Eh I don't consider it a new credit vehicle, margin trading is available in every trading platform. It doesn't make a huge difference for Robinhood; they'll issue a margin call if you're undercapitalized, so the likelihood you would lose any of Robinhood's money is very low. As for the investors, the percentage rate is very reasonable; given standard market conditions you'd make good money using robinhood gold and pu…

Yes margin trading is available elsewhere but only on Robinhood is it so easy. Setting it up on Scottrade or what have you is difficult and has a lot of hoops to run through. On your phone it really feels like "not a big deal", so a lot more young, inexperienced ordinary people can get sucked into it.

> margin trading is available elsewhere but only on Robinhood is it so easy

What part of it is hard on eTrade or ThinkOrSwim? It's almost literally the same process.

The only difference is RobinHood is scooping up all of the people who are new to stock trading and the others aren't. Those same people would be offered the same margin on any other platform.

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

#86

Post by mywittyname »

eugeniub wrote: post #78
austenallred wrote: post #70

Earlier quoted context omitted.

Eh I don't consider it a new credit vehicle, margin trading is available in every trading platform. It doesn't make a huge difference for Robinhood; they'll issue a margin call if you're undercapitalized, so the likelihood you would lose any of Robinhood's money is very low. As for the investors, the percentage rate is very reasonable; given standard market conditions you'd make good money using robinhood gold and pu…

Yes margin trading is available elsewhere but only on Robinhood is it so easy. Setting it up on Scottrade or what have you is difficult and has a lot of hoops to run through. On your phone it really feels like "not a big deal", so a lot more young, inexperienced ordinary people can get sucked into it.

Margin trading is not any easier on Robinhood than any other major brokerage platform. They all make it pretty trivial to trade on margin. Scottrade makes you sign a form saying you understand what you're doing, that's about it (I'm sure Robinhood has the same requirement).

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

#87

Post by akhatri_aus »

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.

The difference is Casinos are your effective counterparty and not a marketplace.

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

#88

Post by [deleted] »

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…

[deleted]

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

#90

Post by AndrewKemendo »

mortehu wrote: post #43
lexo wrote: post #18

Robinhood will lend people money, so they can invest with that. Buying stocks with money that isn't yours. What could possibly go wrong here?

People do this when buying houses all the time, and often at a 5x or 10x margin, rather than just 2x. Even Vanguard supports this.

I think a few years ago there was a pretty big issue with that. Something happened...can't quite remember.
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