How on earth is Robinhood worth 5B?
Someone help me understand. A couple points: - they’re going up against huge brokers already (e*trade, ameritrade) - from the outside it seems like robinhood is used mostly by millennials “playing” with stocks, who will switch to the larger brokerages with more features once they decide to invest seriously - other large brokers are already looking into making “commission-free” versions of their platform to compete Full disclosure, I am a millennial who uses robinhood and loves it. I just can’t picture myself using it when I actually have a lot of money to invest seriously. Is it just hype, or is there logic behind the valuation?
You can ask the same question about 90% of SV unicorns. Answer will be there same. Investors changing the next .....
The next thing. Yes if you are taking about new kind of products like Uber. But why RH would be any different than. Etrade?
RH has traits investors love in startups. It's hyper growth, the population adopting the app is untapped compared to mature competitors, huge demand for the company to offer more products.
The same way AMZN is nearly a trillion
That makes no sense. Amzn has a very strong moat
Wait till you see Robinhood’s moat
I guess I should come clean: I have an on-site with robinhood next week, and I’m just playing with the idea of getting the offer. Wondering if they have a hopeful future and if it’s worth joining right now.
They absolutely have a hopeful future. But it won't be because they're actually developing sophisticated - or even particularly useful - investing software. It will be because selling uninformed order flow to the rest of the market is very lucrative, and they've got a fantastic platform for capturing that value. So by all means work there, but don't use them for personal investing unless you're explicitly gambling for fun.
If they make a web version, it’s game over for Etrades, Fidelity’s and Schwabs of the world. 5B does seem high, but probably about right.
Why? I care about the features and they don't have much while valuation is already half of etradr
I don't know about this anymore. One of the bets is that their competitors won't move to free trading because it'll kill their margins and competitor's investors won't like it so exec team won't pull the trigger. But this is happening now. Both Vanguard and Fidelity are offering free etf trading (on certain etfs, not all) Cheaper end of businesses see extreme cost cutting competition. Established players need to figure out if this is worth fighting for. Discount brokers might have to adopt RH business model if they want to compete.
I just can't get why a business simply based on offering free trades can be attractive. When investing I want tools to help me make profit, not trying to save $10 per trade. It does t amount to much unless you are a day trader which you gonna get killed for not having the tools you need. Also most people who are seriously investing have over 50k then the $10 is irrelevant.
This is about future investors and untapped markets. There's a large population where $10 does matter. People that are just starting out or low income. I guess one of the hopes is that this population will stay with the platform over time when they gain higher levels of income. Last checked, average Robinhood users are around 30 years old. FINRA study from 2015 (data from 2012) showed average investor age is 47-51.
I think if one cannot afford 10$ for a trade, probably shouldn't investing. It's like going fishing without the bait
This valuation is 5 months old and is tied to “excitement due to crypto currencies”. Big red flag. https://www.google.com/amp/s/techcrunch.com/2018/05/10/robinhood-rockets-to-a-5-6b-valuation-with-a-massive-new-funding-round/amp/
Yeah, I don’t understand it either. The only difference between Robinhood and other brokers is no fees on trades. Seems like it’s a very small incentive considering most traders on Robinhood are beginners and likely don’t trade frequently. The only possible explanation is Robinhood figured out a different way how to make insane profits for themselves.
Isnt it easy for etrade to just drop the fee? Its the same old strategy of grabbing the eyeballs and figure out how to monetize the traffic later. Only few succeeded
Things will cool down considerably on a market downturn (which started happening). Until things are going up, everything is rosy - it's similar to Coinbase
I am curious why would you switch if you invest more? I think no commission is huge when it comes to large investment . Disclaimer I am not a robin hood user, invest in etf primarily
Not claiming to be an expert — but from what I’ve researched it seems robinhood in its current states lacks a lot of popular features: analytics tools, mutual funds, Roth IRAs are a few I’ve seen. I understand robinhood is probably looking to add all these features, but they’re playing a game of catch up against some huge players.
If you're going to actively invest "seriously" (and for the most part you shouldn't), the trading fees are - while non-negligible - not what will kill your profits. Your ability to forecast the market will be the primary contributing factor. To that end there are significantly better brokers available. For example, InteractiveBrokers provides a wealth of sophisticated analysis capabilities, many available sources of data and a fully functional API in several languages. The Venn diagram of people who are seriously investing and people who should be more concerned about trading fees than all the other brokerage attributes is vanishingly small. This is why Robinhood's user interface is optimized for unserious, gambling-esque trading. Take a look at the way Robinhood presents options trading and compare it to how several of the more professional brokers (in reality, "prosumer" brokers) present it. The brutal truth is that uninformed investors should mostly not bother trying to beat the market because they have no idea what they're doing. Likewise, informed investors typically care far more about execution, risk management, analytics, portfolio optimization, etc than the trailing costs of fees on any given trade. That leads us to the current predicament: Robinhood is primarily a gambling app for unserious investors, which is monetized by selling its order flow to institutional investors and high frequency trading firms. It is not investing software for people who have a clue what they're doing.