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Robinhood faces scrutiny more than a year later
U.S. District Court Judge Cecilia Altonaga in Miami said in the ruling that investors in GameStop Corp, AMC Entertainment Holdings Inc and seven other stocks can proceed with a proposed class action lawsuit alleging the restrictions artificially increased the stocks’ supply.
The lawsuit was one of several cases brought against Robinhood after it temporarily restricted its customers from buying AMC and GameStop as they began to surge in share price.
Citadel, who to this date is short on the ‘meme stocks’, allegedly colluded with Robinhood the night prior to the trading restrictions.
The U.S. House Committee on Financial Services published a press release in July stating Robinhood and Citadel Securities engaged in ‘blunt’ negotiations before the trading of ‘meme stocks’ occurred.
On January 28th, 2021, Robinhood routed orders to six market makers for equities: Citadel Securities, G1 Execution Services, Morgan Stanley, Two Sigma Securities, Virtu, and Wolverine.
All of which are short on AMC and GameStop.
But despite the continued claims to this date, it leaves you wondering.
Is Robinhood a scapegoat?
Could Robinhood simply be taking the blame for everything that occurred last year, allowing market makers to get away with market manipulation?
See, there’s a connection between Judge Cecilia Altonaga and a defendant’s law firm.
Altonaga’s husband George Mencio, is a partner to Holland and Knight, the defendant of Two Sigma Securities in this case.
This creates a major conflict of interest.
I’d love to learn what you think, leave a comment below.
You can learn more about the conflicts of interest surrounding judge Altonaga here.
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Robinhood is an online investing platform that offers commission-free stocks with high-yield cash management offerings.
This popular stock market trading app does not charge commission for stocks and cryptocurrency trading.
Robinhood, the financial technology company offers trading in stocks, ETFs, other options, and cryptocurrency.
Moreover, this online brokerage provides web and mobile-based services which will allow you to invest and trade easily.
Additionally, the mobile-based services of this platform have made it stand out from its other competitors.
You may be wondering about many questions arising in your head about Robinhood & Robinhood stock.
Here in this article, you’ll find the answers to your queries and get to know all the details about this popular online brokerage like- How does it make money, the pros & cons of Robinhood, Robinhood stock price, the behavior of Robinhood in cryptocurrency & its future, and benefits of long-term investing in stocks & cryptos.
With more than 13 million users, Robinhood is the best platform for active investors or younger investors who want commission-free trading and investing on mobile.
If you want to invest in cryptocurrencies like Bitcoin, Ethereum, Dogecoin, you can use this mobile and web trading platform to invest long term.
Apart from it, Robinhood (a popular stock trading app) went public in July 2021 and its share price was set at $38 for IPO (Initial Public Offering).
Also, Robinhood was listed on the Nasdaq stock exchange under the symbol “HOOD.”
Recently, Robinhood’s CEO Vlad Tenev said that the company is planning to release the feature that allows customers to trade stocks outside of market hours.
The company named this feature, “Hyper-extended hours.”
According to Bloomberg, Robinhood stock is the favorite stock of Cathie Wood’s ARK funds and they’re purchasing the stocks every week since October 2021.
Last week, ARK Funds have bought about 2.45 million shares of Robinhood markets.
Robinhood Business Model- How the company generates income
With no minimum and no fees for trading in stocks, cryptos, and ETFs, the company has to generate income as a business to be sustainable.
This online brokerage makes money from market makers and some other ways.
Here are the ways through which the company generates revenue.
Payment for Order Flow
In 2021, the company generated 75% revenue through the process payment for order flow (PFOF), in which the company directs their customer’s orders equity and options to a particular market maker and the company receives payment for this compensation.
Hence, PFOF is the major income stream for the company.
Payment for order flow unfortunately plays against retail investors.
The SEC has talked about banning the practice since it allows market makers to manipulate the stock prices.
Stock Loan Income
Robinhood generates revenue by lending margin securities to counterparties.
Furthermore, the company keeps all money it generates from lending your stock and does not share it with you.
This is a big problem because large financial institutions make more money from the user while orders are processed through dark pools.
Borrowing Uninvested Cash
Robinhood generates income by borrowing uninvested cash and depositing this cash in interest-bearing accounts.
Membership Fees for Robinhood Gold
Robinhood Gold program is a paid subscription service that allows users to benefit from premium features like margin trading, Level II Market Data, professional research, and enhanced quick access to deposits.
It is also one of the income sources of the company.
Robinhood Gold costs $5 per month.
Also, it gives a free trial of 30 days.
What can you invest in on Robinhood?
Robinhood is a popular trading platform that allows the user to invest in stocks, cryptocurrencies, Exchange Traded Funds (ETFs), and options.
If you want to do commission-free trading in stocks, ETFs, and cryptocurrencies, then Robinhood is great for you.
Moreover, the company allows the investors to buy portions of stocks without paying the full share price.
It gives a free stock upon making referrals and opening the account.
When it comes to investing in cryptocurrencies, Robinhood allows to trade in several digital currencies including Bitcoin, BitcoinCash, Ethereum, Ethereum Classic, Litecoin, Bitcoin SV, and Dogecoin.
Most importantly, Robinhood has introduced IPO access for traders.
Besides, Robinhood does not offer the ability to invest in mutual funds, forex, bonds, and futures options.
The pros and cons
Simple, Easy to Use, and Easy to navigate
Free stock, ETFs, Cryptocurrency Trading
No account minimum
Cash management accounts
Margin investing and Fractional shares
Limited customer support
No mutual funds and retirement accounts
Limited investment offerings
Limited investing research and trading tools
The Pros explained
Robinhood, the popular brokerage in the US, is extremely easy to use and accessible for people of any age and any income.
Robinhood is a mobile-first company that differentiates it from other companies.
Its trading app and web-based platform are well-designed and more than enough to trade.
The new investors or inexperienced users can easily trade on it due to its simple and user-friendly features.
When it comes to costs, Robinhood provides commission-less trading with no minimum fees.
You can invest in stocks, cryptos, options, and ETFs for free.
Furthermore, the company offers fractional share trading, and you can invest in expensive stocks without much capital.
Additionally, it gives quick access to deposited cash.
The account opening process in Robinhood is fully digital and free.
Rather you get free stock upon opening the account and by referring the new members.
Last but not least, the company offered IPO access in July 2021 to benefit its users.
If you trade often, the savings can be huge on this platform due to the lower cost.
The Cons explained
Along with plenty of advantages, there are a few cons of it.
Robinhood does not offer to trade in mutual funds, bonds, and futures trading.
The research, educational resources of this financial company is limited.
It provides basic tools for the services and users can access professional research by purchasing paid membership of Robinhood Gold.
The customer support available in this stock trading app is limited.
Although, the company had made necessary improvements to its customer service in the last year.
The Robinhood scandal has blown up after the freezing of buying ‘meme stocks’ in 2021.
The company lacks full trust from retail investors after restricting the rights to buy specific stocks from its users.
Chief Marketing Officer Christina Smedley just sold 100% of her Robinhood stock. Do you know what the responsibilities of a CMO are? To generate revenue by increasing sales through marketing. You don’t sell your entire stock unless you don’t believe in that company anymore.
But that’s not all, there’s a list of executives who sold their stock too. When did all of this happen? All within the first week of Robinhood’s IPO, 8/4 to be exact.
Welcome to Franknez.com – today’s investing news, Robinhood stock. Things just got interesting.
Lets get started!
Shareholders Sell Robinhood Stock
Robinhood stock tanked on Thursday, 8/5 after several executives filed to sell their stock the previous day. The stock had risen past $70 and traded around $80 after hours.
I had actually seen this information straight from Andrei Jikh on Instagram stories where he posted a screen shot saying, “Wow, here are Robinhood’s executives selling shares.. This doesn’t inspire confidence.”
If you’re not familiar with Andrei, he creates finance videos on YouTube and has been featured in Graham Stephen videos before as well.
Andrei is a Robinhood user but has not yet invested in Robinhood stock. In a recent video, he mentions he’s happy he did not invest in HOOD stock on IPO day but that he is going to keep an eye on the stock for now and see how it performs.
Analysts Stay Cautious
Some analysts are staying cautious. “We cannot in good faith recommend investors get involved in HOOD on either the long or short side,” Wolfe Research analyst Steve Chubak wrote in a note, initiating coverage on the Robinhood with a hold-equivalent rating and a share price target of $45, via. Aljazeera.
So, is Robinhood stock worth the buy? First, ask yourself if these selloffs are something a confident company would do. Second, do you trust them?
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Robinhood stock, ticker symbol HOOD closed at $70.39 today. The stock has is dropping after hours. Today’s momentum reached 172 million in volume. Will HOOD stock be able to keep the momentum going?
Welcome to Franknez.com – today I want to discuss Robinhood stock news. Robinhood has been all over the place with the media. For the most part, it’s been negative. So, lets talk about it.
Robinhood Stock Surges Past IPO Price
Robinhood went public on Thursday, July 29th on the Nasdaq under ticker symbol HOOD. The stock’s IPO price was $38 but fell 8% it’s first day due to a massive selloff from IPO shares by none other than Robinhood’s own CEO, Vlad Tenev.
Robinhood is currently one of Fidelity’s “top traded stock” which has sparked a small chain reaction of investor interest. It’s no surprise the general public, who is unaware of Robinhood’s and Citadel’s malpractice in the market, have hopped on the Robinhood stock train.
Contrary to what mainstream finance platforms are saying, Robinhood stock has not been a top mention on Reddit’s WallStreetBets. This deceit has me thinking whether the media is trying to redirect retail investors to buy Robinhood stock.
A diversion if you ask me.
22 Million Users And Falling
The mainstream media fails to recognize that a massive community of retail investors is ditching the Robinhood app and using alternatives such as Vanguard and Fidelity.
Investors are also moving to exchanges such as Kraken for their cryptocurrency. Will ignoring these two factors prove to be a good idea for investors buying Robinhood stock? We’ll find that out with time.
But will it be enough? Big YouTubers in the finance niche have even stopped sharing their Robinhood referral links to their mass audience.
While large institutions and investors might be able to support their billionaire friend, retail investors have a different sentiment.
Retail Investor Sentiment
Reddit stocks are stocks the Reddit community loves. Go to r/wallstreetbets there is very little to no talks about HOOD stock. The little there is isn’t positive at all.
Retail investors don’t trust the company anymore and for that reason, Robinhood is NOT a Reddit stock.
Robinhood will grow if new retail investors flock towards the app again and if they invest in the stock. However, retail investors are warning new retail investors about the GameStop and AMC manipulation.
With several 100/100 short squeeze scores, AMC’s short squeeze has been prolonged through numerous naked shorting tactics behind dark pool data.
So, although Robinhood has a rather great app interface, the new generation of retail investors ties them too closely to Citadel Securities; the hedge fund who tried to bankrupt AMC and GameStop.
Let me know what you think
Are you investing in HOOD stock? Where do you think Robinhood is headed? What would make you trust in Robinhood again?
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