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Robinhood stock trading app valued at $1.3B with big raise from DST

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Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#91

Post by selectodude »

arcticfox wrote: post #85
adambratt wrote: post #69

Robinhood is just a marketing play. Anything about them selling flow or using margin offerings to become profitable is not realistic. Traditional brokerages have a customer acquisition cost of around $400 to get someone to deposit at least $100 in an account. They've got a million users and continue to grow quicker and quicker. For a small multiple of traditional CAC they are already close to their >$1B valuation jus…

What do they do to make money once they have their users on board?

They really do sell flow and use margin. There just isn't any way they're profitable doing just that.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#92

Post by mtbcoder »

greenyoda wrote: post #35
kevinmannix wrote: post #3

I laughed at the article's url slug playing on the company's name - now-whos-the-rich . I haven't used Robinhood, but welcome new fintech companies who lower the barrier of entry toward financial health for the average consumer. Good for them, and I hope they use this money well.

"who lower the barrier of entry toward financial health for the average consumer..." The barrier is already pretty low: - Max out your 401-K (and collect your company match, if any). - Invest in low-cost index funds from Vanguard. - Pay off your credit card debt, if any (since you probably won't make 20+% a year on your other investments). - Don't buy lots of stuff you don't need. On average, you'll get much better r…

Is it low though? You read all the time that your average American barely has any money set aside for retirement or that they often need to leverage credit cards for emergencies. Even those that can put money aside, how feasible is it for them to max out a 401K? The barrier to entry into the stock market is incredibly high when you've only got at best $25 at the end of the month in your pocket.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#93

Post by polack »

selectodude wrote: post #91
arcticfox wrote: post #85

Earlier quoted context omitted.

What do they do to make money once they have their users on board?

They really do sell flow and use margin. There just isn't any way they're profitable doing just that.

They could be making a good chunk of money from stock lending, like zero cost index funds are doing.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#94

Post by user5994461 »

throwayedidqo wrote: post #55

Robinhood's Gold tier, which is a different name for buying on margin, has potentially dire implications for the health of the economy.... The great depression was largely the result of massive numbers of everyman speculators entering the markets with reckless amounts of leverage. Robinhood vastly lowers the barrier for gambling with money you don't own. There's a reason you can't buy lottery tickets with credit card…

> There's a reason you can't buy lottery tickets with credit cards.

Well. You can.

Not sure what you were trying to say.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#95

Post by user5994461 »

dharma1 wrote: post #67

Any UK/EU equivalent of Robinhood (free trading, ISA support)?

Barclays, Lloyds and probably HSBC.

They have trading accounts with ISA. It's not free but the fees for mutual funds, ETFs and most products are fairly reasonable.

However if you intend to do daily trading, I suggest you reconsider before you loose a lot of money. It's not that the fees are higher than the gains (they are), it's that it's very risky and good way to lose a lot of money.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#96

Post by bigtunacan »

user5994461 wrote: post #94
throwayedidqo wrote: post #55

Robinhood's Gold tier, which is a different name for buying on margin, has potentially dire implications for the health of the economy.... The great depression was largely the result of massive numbers of everyman speculators entering the markets with reckless amounts of leverage. Robinhood vastly lowers the barrier for gambling with money you don't own. There's a reason you can't buy lottery tickets with credit card…

> There's a reason you can't buy lottery tickets with credit cards. Well. You can. Not sure what you were trying to say.

Since it is gambling is regulated at the state levels this varies by state. 14 states allow for purchasing lottery tickets with credit cards, the others don't.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#97

Post by lotsofpulp »

mtbcoder wrote: post #92
greenyoda wrote: post #35

Earlier quoted context omitted.

"who lower the barrier of entry toward financial health for the average consumer..." The barrier is already pretty low: - Max out your 401-K (and collect your company match, if any). - Invest in low-cost index funds from Vanguard. - Pay off your credit card debt, if any (since you probably won't make 20+% a year on your other investments). - Don't buy lots of stuff you don't need. On average, you'll get much better r…

Is it low though? You read all the time that your average American barely has any money set aside for retirement or that they often need to leverage credit cards for emergencies. Even those that can put money aside, how feasible is it for them to max out a 401K? The barrier to entry into the stock market is incredibly high when you've only got at best $25 at the end of the month in your pocket.

Exactly, I would even say the situation is so bleak for some Americans (and even people all around the world) that they might as well enjoy themselves in the short term, especially when they're young, while they can, as opposed to risking it on the uncertain future.

Edit: Also, as the tax base gets smaller, I can see some of the tax advantaged accounts people have money in become not so tax advantaged. The money to replay all this debt (including infrastructure, environmental, and policy debt) has to come from somewhere, and I'd bet it's both from inflation and savings. Or someone hits the reset button with a revolution or war.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#98

Post by matwood »

mtbcoder wrote: post #92
greenyoda wrote: post #35

Earlier quoted context omitted.

"who lower the barrier of entry toward financial health for the average consumer..." The barrier is already pretty low: - Max out your 401-K (and collect your company match, if any). - Invest in low-cost index funds from Vanguard. - Pay off your credit card debt, if any (since you probably won't make 20+% a year on your other investments). - Don't buy lots of stuff you don't need. On average, you'll get much better r…

Is it low though? You read all the time that your average American barely has any money set aside for retirement or that they often need to leverage credit cards for emergencies. Even those that can put money aside, how feasible is it for them to max out a 401K? The barrier to entry into the stock market is incredibly high when you've only got at best $25 at the end of the month in your pocket.

> You read all the time that your average American barely has any money set aside for retirement

That's not because there is a high bar to investing, it's that most people are financially undisciplined. I see it all the time, people get a bonus and the very first thing they do is go buy a new car. Literally one of the worst things you can spend money on is a car, and a new one makes it even worse. Many people carry CC debt, which is absolutely crazy. Keep in mind I'm not talking about people who are struggling just to put food on the table, but people who should be able to save, but instead do really stupid things with their money.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#99

Post by matwood »

masonhensley wrote: post #8

FYI - you will not have a good time buying and selling stocks onesie-twosie when it comes time to filling out your tax return. If you want to avoid commissions, Schwab & Fidelity have commission free ETF's - just buy and hold.

> If you want to avoid commissions, Schwab & Fidelity have commission free ETF's - just buy and hold.

Most of the brokers do this now. Also, Schwab just lowered stock trade commissions to $4.95. Not to sound like a shill, but Schwab bank also has zero fees (no ATM fees, no foreign transaction fees, etc...) if you open (don't even need to fund) a companion brokerage account.

I think companies like Vanguard have pushed down expense ratios and now the likes of Robinhood have pushed down trade costs through competition.

Re: Robinhood stock trading app valued at $1.3B with big raise from DST

#100

Post by jcfrei »

vostok wrote: post #88
jcfrei wrote: post #84

Earlier quoted context omitted.

Since they route your orders for you I'm guessing you don't get very good prices - ie. you get a larger spread than other market participants.

You can't get filled at a worse price than the lit exchanges are showing. I have no affiliation with Robinhood and think that they're bad for the markets, but what you listed is FUD.

> You can't get filled at a worse price than the lit exchanges are showing.

Can you be more specific? I believe you are talking about a market order. Unless you have full access to all order books you can't really know whether you were filled at the best price of all lit exchanges. AFAIK brokers have a duty for best execution - still I'm pretty sure that you get poorer execution on Robinhood than on other brokers: They route your orders to just 4 firms. Though the "loss" might be insignificant for the average retail investor trading very liquid instruments.

Adding further to my point: If you compare price improvements between Schwab (http://www.schwab.com/public/schwab/nn/legal_compliance/impo...) and KCG (https://www.kcg.com/access-performance/execution-quality) (one of the 4 firms) you can see Schwab achieves better execution for SP500 firms. Two Sigma and Citadel are both worse as well. You get what you pay for.

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