Robinhood down for the count
Mar 04, 2020


Robinhood goes down on one of most important trading days of the year. WSB traders feel the burn.


Robinhood (RH) is the Silicon Valley-funded trading platform geared towards millenials with smaller accounts. A slick, intuitive user-interface drew them in, but the free trades keep them there.

Largely due to their growth within the younger demographic, RH is the latest Silicon Valley Unicorn rumored to be eying an IPO. Their venture capital investors are certainly eager to get liquidity on the nearly $1B of capital they’ve invested in Robinhood. But this week may prove to have been a major bump in the road.   

Traders on RH are notorious for exchanging ideas and trolling both each other and the “normie” market forums on Sub-Reddit called Wall Street Bets (WSB). WSB has recently received notoriety after reports on CNBC and in Bloomberg News

But perhaps infamy would be the better descriptor: stocks- or Stonks, as they are affectionately referred to after one commentor’s typo- are not treated as investments, but as chips in a casino that may ultimately yield tendies (slang for a significant gain). Traders in WSB make aggressive, concentrated bets on options, often in pursuit of a ride on a coveted Meme Stock. And they’ve bucked institutional skepticism by rapidly pushing up stonks like Tesla, Beyond Meat, and Virgin Galactic. 

The WSB stonk community routinely derides other subreddits like r/investing whose participants espouse quaint strategies like diversification. They mock terms like “value investing” and “buy and hold” as Boomer nonsense. They love the binary, more instant gratification of options and they routinely advertise their bets. They move in and out quick in their hunt for tendies. 

So we'll leave it up to the reader to decipher when robinhood went down.

Brokerage mentions over time

The outrage directed at RH yesterday was overwhelming, WSB moderators had to direct commenters to a specific thread:

theycallmeryan

To the surprise of no one, Robinhood is down for the second straight day. To avoid multiple posts and comments about the same thing, please keep all anger, discussion, and questions about Robinhood's outage or switching to another broker in here. 

The anger built throughout the day and members of the community started rallying the troops:

DelaRosaX

Fuck Robinhood. They’ve fucked me out of so much fucking money yesterday, and now today we’re on the path to the same shit. App is pretty much unusable and frozen. It’s not like this is a one-time issue either, RH’s app is always lagging, crashing, and slowing down and their customer service is straight balls. Fuck this broker, let’s get that class action lawsuit rolling, and let’s get a“Fuck Robinhood on the chat” 

They were calling for FINRA or SEC investigation: 

Ned_Flanderz

2 absolutely historic "trading days", and 11 million people conveniently cannot access their accounts. This is not a coincidence, this is a way to keep the market from acting and overreacting to the news that was going to hit the wire. If there is no investigation into RH by FINRA or the SEC, this is an inside job, it was intentional, to avoid even more massive market swings. Prove me wrong.

And class-action lawsuits:

DelaRosaX

Fuck Robinhood. They’ve fucked me out of so much fucking money yesterday, and now today we’re on the path to the same shit. App is pretty much unusable and frozen. It’s not like this is a one-time issue either, RH’s app is always lagging, crashing, and slowing down and their customer service is straight balls. Fuck this broker, let’s get that class action lawsuit rolling, and let’s get a“Fuck Robinhood on the chat”

And they discussed alternatives. As you can see in the chart, there was a surge in mentions of ETrade, Think or Swim, Ameritrade, and WeBull. Robinhood’s bet is that these younger traders grow into large customers as they age; but this week they just may have cemented their brand a starter platform for novice investors- a platform you eventually graduate from:

v270

This is r/wallsteetbets, not some r/RobinHood support forum. It's a shitty platform with shitty service, and Their business model is straight up predatory. RH has been cucking you for years. This is just the time you came home early and found it gaping you in your tendies. Get a limp dick cobol running blue blood broker like the rest of us and loose your tendies with five nines uptime.  

WSB traders positions, spy puts

Option value erosion accelerates as they get closer to the expiration date. As you can see, WSB traders were heavily positioned in options expiring on Friday of this week. That made the outages on Monday and Tuesday particularly painful for these traders, as they were unable to trade out of these bets during a critical period of volatility. 

Brand loyalty can be fickle. Especially with nearly every other broker now offering free trades, might this week’s outage begin an avalanche of negative perception and government action that threatens this Silicon Valley Unicorn’s young, fresh, and friendly brand reputation? Might Robinhood have to distract itself with a public PR battle similar to the one Uber was forced to engage in? 

Follow Top Stonks for more coverage of the Robinhood saga and the WSB community.