Robinhood Screwed Its Users But Is More Popular Than Ever (vice.com) 60
An anonymous reader quotes a report from Motherboard: Robinhood is seemingly still very popular. According to The New York Times, Thursday -- the day of Robinhood's strictest trading restrictions -- was also its best ever: it saw over 177,000 downloads (twice the previous week's daily rate) and had 2.7 million daily users. Robinhood also announced on Monday that it raised another $2.4 billion in a new funding round led by Ribbit Capital and including existing investors such as ICONIQ Capital, Andreessen Horowitz, Sequoia Capital, Index Ventures, and NEA. Bloomberg reported that the investment would convert into equity at a $30 billion valuation or a 30 percent discount on its initial public offering (IPO), and then would be followed by another $1 billion infusion converting to equity at either a $33 billion or a 30 percent IPO discount. Robinhood has been planning to go public in May since late last year, either through an initial public listing, a direct listing, or a merger with a SPAC.
The truth is that Robinhood has momentum, a hooked user base, and a business model that seems empowering for users but rather exploits them. In an interview with The Wall Street Journal, Robinhood's senior director of product management Madhu Muthukumar said that the app's gambling-adjacent interface is intentional and designed to "make it feel like something that's familiar to populations that historically have not been served." And for all the rhetoric around "democratizing" finance, Robinhood sells all its users' trades to huge firms such as Citadel Securities which sees them before they are even executed on the market. Indeed, the SEC fined Robinhood $65 million recently for losing investors tens of millions of dollars due to its business dealings with market makers.
As Jacob Silverman writes in The New Republic, the troubles it's facing now are unlikely to halt Robinhood's advance. In a time of rampant poverty, precarity, and also absurd wealth, we are heading towards becoming a nation of gamblers hoping to strike it rich. That Robinhood's siren call is more popular than ever should be read as a omen -- the app is simply bringing more people to a casino when they have less to gamble with. And in a casino, the house always wins.
The truth is that Robinhood has momentum, a hooked user base, and a business model that seems empowering for users but rather exploits them. In an interview with The Wall Street Journal, Robinhood's senior director of product management Madhu Muthukumar said that the app's gambling-adjacent interface is intentional and designed to "make it feel like something that's familiar to populations that historically have not been served." And for all the rhetoric around "democratizing" finance, Robinhood sells all its users' trades to huge firms such as Citadel Securities which sees them before they are even executed on the market. Indeed, the SEC fined Robinhood $65 million recently for losing investors tens of millions of dollars due to its business dealings with market makers.
As Jacob Silverman writes in The New Republic, the troubles it's facing now are unlikely to halt Robinhood's advance. In a time of rampant poverty, precarity, and also absurd wealth, we are heading towards becoming a nation of gamblers hoping to strike it rich. That Robinhood's siren call is more popular than ever should be read as a omen -- the app is simply bringing more people to a casino when they have less to gamble with. And in a casino, the house always wins.
Downloading it just to downvote (Score:5, Insightful)
How many people downloaded it just to make themselves look like real users so their ratings wouldn't be removed?
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Very very few people give shits about things they don't use to go to that extent. The reality is people were FOMOing into day trading and the RobbinHood app had been in the news, so they start there.
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In fact you have to download it to leave a review on Google. It's a bit annoying because you have to remember to review crapware before uninstalling it.
Puff Piece - Completely detached from Reality (Score:4, Insightful)
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Re: Puff Piece - Completely detached from Reality (Score:5, Funny)
"had to"
Allow my to draw an analogy with this nice hyperbole here:
"Hitler had to gas the Jews"
Yes, this thread is now closed. ;)
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"had to"
Allow my to draw an analogy with this nice hyperbole here:
"Hitler had to gas the Jews"
Yes, this thread is now closed. ;)
Good gods did that last line make me laugh too hard. If only I had some mod points for you.
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Re: Puff Piece - Completely detached from Reality (Score:4, Insightful)
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You have a strange definition of illegal. To the rest of us, it means "against the law". Breaching a contract is, of course, illegal.
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No. It is not illegal to, for example, not make a monthly credit card payment (which violates the contract you signed with the credit card company). The company can, in turn, do various things (including sue you in civil court), but it can't have the local police arrest you.
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Illegal != criminal.
Breach of contract is a violation of the law. If it weren't, a lawsuit would accomplish nothing.
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The crazy thing is, Robinhood probably did it's users a favor by stopping buys at that point... anybody getting in that late in the game was going to lose their shirt just as bad as the shorts did. What the hell ever happened to buy low sell high. Sure it's possible they could have driven the price up more, but most short positions had been closed or covered by that time.
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Not really, had they sold right as the shorts started clearing they would have lost a minor amount at most, and selling when the shorts came due was ALWAYS they strategy posted by WSB. But between the stoppage by RH et al and internal selling game the hedge fundies played, the price dropped from over 500 to under 300 well before the shorts started clearing en masse.
Re: Puff Piece - Completely detached from Reality (Score:2)
The masses are tired of being cheated and screwed by fintech.
You give them too much credit.
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Well said.
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Re: Puff Piece - Completely detached from Reality (Score:2)
"We put that in there to be funny." Oh, says the class action lawyer, how were users to tell which provisions weren't a joke?
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Doesn't matter if it's a joke. You might have some point if they said e.g. "also we get your first born if you go below margin unless you can guess our HR head's cat's name (hint it rhymes with Pumplestilskin teehee)". Clearly not real and unenforceable etc...
In this case, they can certainly enforce you not being a cat. Silly, sure, but enforceable. That being in there invalidates nothing.
Re: Puff Piece - Completely detached from Reality (Score:3)
See, for instance, Graham v. Scissor-Tail, Inc., 623 P.2d 165, (Cal. 1981), where factors to finding unconscionability and thus unenforceability include 'contract phrasing or language that a non-lawyer signer would not understand' and 'contract provisions that are inconsistent with the signing partyâ(TM)s reasonable expectations.' Do non-lawyers understand why cats appear in the TOS, and do they reasonably expect that RH o
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Robinhood will explain that they couldn't meet the deposit requirements of their brokers, and restricted share purchases in line with their user agreements, and nothing further will happen to them.
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But Google removed the 1 star ratings (Score:3, Informative)
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Don't worry, its average rating is back down to 1.1. I'd imagine a lot of people will think twice about downloading an app rated like that.
The real question is how many ACAT's (Score:5, Insightful)
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RobinHood should be scared (Score:2)
The thing that should scare RH is that these people moving accounts weren't involved in buying GME (or other
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All press is good press (Score:2, Troll)
How many of you had even heard of Robinhood before this GME debacle? I hadn't. I didn't even know there were zero-commission brokers around (though the technically commission-charging broker I've been using for years gives me so many free transactions per month that I never actually pay any commissions). I'm now curious about Robinhood, and if I were looking for a brokerage I might well give them a try.
Bottom line, this GME thing, Robinhood's actions around it, and the furor over those actions have made
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Lol, this is the first time you've heard about RH complaints?
Reading comprehension not your strong suit? I said that this was the first time I'd heard of Robinhood at all.
For someone admitting their ignorance at the beginning, you should be more careful about your conclusions.
My conclusions actually don't depend on knowing anything about Robinhood... they depend on knowing about the general effects of press exposure on business. I didn't coin the phrase "All press is good press".
I could absolutely see the recent news cycle sparking interest in a lot of people who have never traded before... and only one broker is being named in the news.
Re: All press is good press (Score:2)
You don't even believe this yourself, do you?
Hosehold name... yes, the same way Stalin was a household name in Asia. ;) ;)
Except, the mini-me version! Good enough for five minutes of a flash in the pan. A literal one for their CEO.
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You don't even believe this yourself, do you?
Of course I do, or I wouldn't have written it.
There's a long, long history of companies obviously benefiting from bad press. "All press is good press" is not a phrase I made up.
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I've known about Robinhood and similar trading platforms (Acorns, Stash) since late 2015.
I didn't, and I know more about trading than the vast majority of the population. I could absolutely see the recent news cycle sparking interest in a lot of people who have never traded before... and only one broker is being named in the news.
There's no such thing (Score:2)
When a city gets its first casino, it's popular (Score:2)
Re: When a city gets its first casino, it's popula (Score:2)
Seriously, how are ther people in freaking 2021, stupid enough to still go to casinos?
Do they get a "I love to get ripped off" embossed on their foreheads right at birth, in the moron factory?
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Same reason some people go to church. You ever been to a casino?
Good point - people pray harder in a casino than in a church.
Because downloads != liking (Score:2)
Maybe they just tried to reinstall cause it was clearly broken!
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WallStreetBets didn't help here (Score:3)
Those guys did a good thing with what they did for sure, but I think a lot of people will see this as a get rich quick scheme and try to jump in for that, and get burned as a result.
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Bye-Bye (Score:1)
Screwed its users? (Score:4, Interesting)
No conspiracy required.
The funny part to me is many of those dummies who opened their RH accounts and successfully managed to trade GME shares are going to get fucked hard when the price collapses again. And they'll probably find a way to blame RH for that too rather than their own stupidity for joining a crowd sourced pump and dump.
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How so? Robinhood is a brokerage and has to have funds for the trades people make on margin to settle its books. And if Robinhood uses a clearing house then they have to deposit funds with the clearing house to settle trades. So if a hundreds of thousands of people all arrive in a single day suddenly wanting in on the GME action with margin trades or fractional trades or before their funds clear then RH are going to be squeezed.
This is total BS. The solution to covering the margin is to have users deposit money to cover it, not to tell users they can't buy under any circumstances.
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Robinhood is corrupt (Score:2)
Robinhood: We're democratizing trading for the average person!
Peasants (aka Retail traders): Let's make money by banding together against the greedy rich hedge funds and market makers who make money at our expense
Sheriff of Nottingham (AKA Hedge Funds): Stop that Robinhood! We don't like it when you help steal from us to give to the poor.
Robinhood: Ok Sheriff, Sir. I'll keep those peasants in their place.
Robinhood then Disables all buying of meme stocks to help preserve o
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