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

<i>“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</i><p>Wow, so that&#x27;s effectively opening up new easy to get credit vehicles for unsophisticated investors. How could that go wrong?<p>Even if you are a professional trader you&#x27;ll take a bath on margin over the long run. They are incentivizing what is effectively borrowing for gambling and that is their long term revenue strategy? Might be a great money maker but it certainly is playing with some really big barrels of fire.<p>&quot;Three things ruin people: drugs, liquor, and leverage - Charlie Munger&quot;<p>edit: The point here is not that Margin is a new service, yes every brokerage has it, it&#x27;s that it is irresponsible to use Margin if you are not a sophisticated investor. Its even more irresponsible to push leverage onto unsophisticated investors.<p>Not everyone is going to understand the risks of leverage and if Robinhood makes it as easy as candy crush to trade on leverage, enough gamified users are &quot;playing&quot; stock market with real money and a margin call happens during a huge downturn, it will be exceptionally nasty.

Enticing millenials to &quot;trade&quot; individual stocks is quite possibly the most anti-<i>Robinhood</i> thing I can think of. The only thing more ironic would be to encourage them to take on margin...which as it turns out is literally Robinhood&#x27;s business model.<p>99% of users on the platform will ulimately end up participating in a direct transfer of their own wealth to a more sophisticated trader or algo (i.e. The banks and hedge funds who aren&#x27;t just doing this for &quot;fun&quot; and have the financial and political backing of the world&#x27;s elite). Side note: <i>even those hedge funds can&#x27;t consistently beat the market.</i><p>If you are reading this, for your own finacial future I beg of you, please take your money to Vanguard instead and buy some index funds. Scratch your &quot;trading&quot; itch by trying to game your asset allocation instead. Future you will thank present you.<p>If you don&#x27;t believe me, please look into any of the academic research that has been conducted around efficient markets.

From my experience having used Robinhood for almost two years now, it&#x27;s fine up until something happens with your account and you need to talk to someone. Their customer support seems almost nonexistent, no phone number, only an email where their response time is anywhere from a day to a week+ and you have to bug them to follow up. On top of that, the support that I have gotten hasn&#x27;t been very clear, like they don&#x27;t know what&#x27;s really going on with my account. When I have several thousand dollars somewhere with active investments, I don&#x27;t want to have to wait around and deal with a different support person for each message.<p>Just recently I had to email them first to find out that they have an issue with my account and &quot;any sell, dividend, etc. will have 28% removed and sent to the IRS.&quot; And I &quot;will need to reach out to IRS regarding those funds.&quot; They did not tell me anything when they apparently started doing this. I was paying for Robinhood Gold too at the time.<p>I&#x27;m sure most people will have OK experiences with Robinhood, but I&#x27;m closing my account and moving to another broker with better support and communication.

Pretty skeptical about the value here.<p>&gt;A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage<p>Users pay money to be loaned money? How is this different than a microloan service?<p>&gt;Robinhood also earns money from rebates its gets for directing its order flow to broker dealers<p>That means, presumably, the dealers are profiting in some way by handling trades from investors less informed than themselves.<p>At the end of the day, Robinhood may not have trading fees, but the underlying brokers it works with do. I don&#x27;t see how a microloans service and some kickbacks are enough to compensate. Presumably they are hemorrhaging money right now and the VC money is subsidizing novice investor&#x27;s trading fees.<p>Despite the name &quot;Robinhood&quot; like this is giving money to the poor, this service seems extremely predatory to its users, offering them cheap loans to gamble with on the stock market and taking kickbacks from the exact type of people Robin Hood was stealing from.

&gt; 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.”<p>Just so everyone knows, order flow from unsophisticated investors is considered a valuable resource because, when filling it, you know that you&#x27;re more informed than the person trading against you.

Wow. Am I the only one here that remembers that feeling of 1999, when all stocks were going up, and one could do no wrong with leverage and a Quick and Reilly account?<p>Good idea for Robinhood to target millennials, who definitely <i>aren&#x27;t</i> old enough to remember.

I have a modest amount of money in Robinhood. I love the app and they way it has encouraged me to learn about markets.<p>I started in March of 2016. I was naïve and I made a lot of silly mistakes early on, but I was able to learn a lot of fundamentals when the stakes were low.<p>I view it more as a gaming app than investing — it&#x27;s a supplement, not a replacement for investing and asset management.

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.......<p>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.

Their margin rates are very high at best and potentially usury at worst. They are counting on you not using the full amount of margin on the tier you paid for and further, counting on you being too lazy to downgrade to a lower (or no) tier when you no longer need it. There was nothing I could find in the FAQ about them automatically dropping the tier as your use declined.<p>For comparison - and I have no vested interest here - Interactive brokers currently charges 0 - 100,000 2.41% (BM + 1.5%) and 100,000.01 - 1,000,000 1.91% (BM + 1%) on USD margin loans.<p>If you think you will be an active user of margin I would go elsewhere unless you can justify savings on the commission side against paying 0.005&#x2F;shr elsewhere.

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

Robinhood will lend people money, so they can invest with that. Buying stocks with money that isn&#x27;t yours. What could possibly go wrong here?

These announcements always remind me of this.<p><a href="https:&#x2F;&#x2F;m.signalvnoise.com&#x2F;press-release-basecamp-valuation-tops-100-billion-after-bold-vc-investment-c221d8f86ad7#.9lqnwvrs6" rel="nofollow">https:&#x2F;&#x2F;m.signalvnoise.com&#x2F;press-release-basecamp-valuation-...</a>

Why is there no browser version? Some of us don&#x27;t like using our phones for this type of stuff. Just because I don&#x27;t like little screens. Other than that, it is about time someone broke up this market. I welcome our new free overlords.

I&#x27;ve been using Robinhood for the past year and made a 14% return which amounted to an extra $1500 in my pocket that I wouldn&#x27;t otherwise have. There is so much negativity surrounding Robinhood here and I think it&#x27;s coming from speculative people who haven&#x27;t actually used Robinhood and can&#x27;t assess it empirically. They charge _0_ fees. What&#x27;s so anti-robinhood about that? If you&#x27;re concerned about them making money off of order flows, just use limit orders. I _only_ place limit orders.

&quot;hey guys! lets take a model that has been proven effective by many years of fierce market competition, and <i>disrupt</i> it by doing for free!&quot;

&quot;Additionally, Robinhood earns revenue by collecting interest on the cash and securities in Robinhood accounts, much like a bank collects interest on cash deposits.&quot;<p>I wonder if selling (or using) data from their customer is more profitable than the Gold plan.

Is there a chance of losing money that is invested in RobinHood? I am not talking about trading losses -- but some thing like RobinHood going under and me losing money as a consequence of that? Are there any protections for consumers?

This is gambling for almost all users, and yes I used robinhood for a couple trades. Use <a href="https:&#x2F;&#x2F;stockfuse.com" rel="nofollow">https:&#x2F;&#x2F;stockfuse.com</a> and you won&#x27;t actually lose your money.

If Robinhood bundles user debt and sells it at varying ratings (depending on information about the stocks being bought, perhaps) they could protect themselves from a large default and probably make money doing it

My understanding is that if you trade through a platform like this, that&#x27;s monetizing through order flow, you&#x27;re getting screwed by HFTs. I.e. AFAIK Robinhood doesn&#x27;t need to be selling the data to HFTs (which they don&#x27;t do), for you to get screwed by them.<p>Anyone here in the space who can quantify the &quot;hidden&quot; cost you incur because of more sophisticated traders trading against you?<p>It feels like working with a broker who&#x27;s explicitly charging you might actually be cheaper if you take this &quot;cost&quot; into account?

If you&#x27;re going to gamble, have some real fun with Forex, which commonly offers 50:1 leverage in the US. Though I&#x27;m being a bit sarcastic, highly leveraged trading can be quite entertaining as long as you treat it exactly as you would a trip to Vegas - don&#x27;t bet more than you care to lose, know when to quit and don&#x27;t try to make a living doing it.

Never seen a marketing video with so much disclaimers and fine print before as the one on the robinhood site

I think the most surprising aspect is their desire to offer a similar referral scheme as Uber.<p>&quot;Now when one user refers someone else who signs up, both get one share of a randomly selected company from a set that includes Facebook, Apple, RiteAid, Ford, and General Electric.&quot;

This is just a slightly more obfuscated &quot;binary options&quot; betting scam.<p><i>A Gold subscription lets users borrow up to double the money in their account to trade on margin with leverage</i><p>Gamble alright.

Somebody knows if there they are planning to operate in UK?

i dont use gold for the leverage, but for access to execute trades after hours... do i automatically fall into dumb millennial trading on margin?

I&#x27;ve been interested in Robinhood for some time. Does anybody here have experience with the app (good or bad) they can share?

A unicorn with a revenue stream, how novel.

Take from the rich to give to the poor to give back to the rich. Brazenly named.

encouraging retail investors to trade frequently and on a margin sounds like a terrible idea. Basically creating more suckers for the high frequency traders to trade against. Should rebrand the app and call it Robber-in-a-hood

Do they have an API?

Still US only?<p><i>sigh</i>

Remember LendingClub which was a money lending business that touted it&#x27;s machine learning KYC &amp; AML process would automate the overhead but what happened was it just let a ton of people with non existent credit to grab money...that they will never pay back. Techcrunch, news, tv, they had it all.<p>I&#x27;m not saying Robinhood is bad or anything but the business model and the valuation built on top of it is very questionable.<p>It&#x27;s almost like gravity does not exist anymore. It&#x27;s all about making it across the IPO finish line and then it&#x27;s like fuck what happens to everyone else because I&#x27;ve already got Monssack Fonseca shuffling my untaxable money.