(Personal opinion) You'd be very surprised by this announcement if you modeled Robinhood as a discount brokerage. You'd be less surprised if you modeled it as a gaming company. I think the second is, broadly, the correct mental model for Robinhood.https://www.bloomberg.com/news/articles/2020-04-16/robinhood-said-to-be-raising-new-funds-at-about-8-billion-value …
-
Show this thread
-
The contra case to this: Maybe brokerages are not just fuddy-duddy with respect to their marketing approaches. Maybe they are *also* insufficiently quick to react to the economic environment and perform their social purpose, which is getting people invested at rather low prices.
2 replies 0 retweets 18 likesShow this thread -
I think you could believe something like that. It's internally consistent. Robinhood has probably accelerated timeline of one major win for consumers. And you could therefore be proud of e.g. working at Robinhood in a way that you would not be proud of working at e.g. MGM.
2 replies 0 retweets 21 likesShow this thread -
That said, have to say this: as someone who is (in less socially distanced times) a happy customer of MGM, I have no illusions about whether that enterprise is a casino or a financial services provider, despite its substantial investment in providing financial services.
1 reply 1 retweet 19 likesShow this thread -
Anyhow, what would a real money online gaming company be thinking about the current state of the world: "Sweet! Competing entertainment options are getting crushed. MGM is literally closed. Our customers are stuck at home and some have increased risk appetite."
2 replies 0 retweets 32 likesShow this thread -
What would a discount brokerage be thinking about the current state of the world: "#%()#% me (#%))#% me (#%)%#( me net interest margin drives this business and that relies on taking customer deposits and investing them almost risklessly. That word 'almost' is a scary word now!"
2 replies 0 retweets 18 likesShow this thread -
Fun fact about 2008: e*Trade came about *this* close to going bankrupt because it got a little deeper than every other discount brokerage in that notably safe place to park customers' money: home mortgages.
1 reply 0 retweets 15 likesShow this thread -
And so if you're CEO at a discount brokerage right now you're probably less enjoying the massive spike in new account signups (worth ~nothing to you today, nature of the model right) and instead paying *very careful attention* to your daily update on treasury risk.
2 replies 0 retweets 19 likesShow this thread -
Replying to @patio11
Don't these "free" brokerages make their money by selling the data of their punters to prop trading companies?
1 reply 0 retweets 0 likes
No, they don't. That is a common misconception. https://www.kalzumeus.com/2019/6/26/how-brokerages-make-money/ …
-
-
Replying to @patio11
Unless I'm blind I don't think your article has any links to evidence about Robinhood other than a link to another article claiming they make 40% of their money from selling order flow to market makers
1 reply 0 retweets 0 likes -
Replying to @dtip_
Yes, but it does explain why selling order flow is not "selling data" and why that is in the interests of the people whose flow is being sold.
1 reply 0 retweets 0 likes - 1 more reply
New conversation -
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.