Should I invest in Robinhood?

Oct 24, 2019 10 Comments

Other companies starting to do 0 dollar trades. Worth it to buy shares on the private market?

TC: 500k

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TOP 10 Comments
  • Microsoft
    Tier 1

    Go to company page Microsoft

    BIO
    #1 in Prestige
    Tier 1
    Robinhood makes money by getting low information investors to buy complex investment products with market orders (great example: far out of money thinly traded options, which they default to half the ask price (when there are no bids), which is usually set insanely high), and then selling this order flow to HFT firms who are more than happy to take the other side of what is typically a losing trade.

    In part it achieves this by not providing the services (Eg proper charting tools) that a serious investor would use.

    Competitors to Robinhood are often more in the customers favor, and so would be less profitable to HFT firms who buy the order flow.
    Oct 24, 2019 2
    • OP
      Very interesting. What do you think about their future prospects?
      Oct 24, 2019
    • Microsoft
      Tier 1

      Go to company page Microsoft

      BIO
      #1 in Prestige
      Tier 1
      Middle class Americans could definitely invest in the stock market more than they currently do, and Robinhood is currently the easiest option for them.

      But I don’t really see them being able to become more than an entry level tool.

      They seem to really want to move into traditional banking, which is a very overcrowded market.

      But it’s possible that they could offer some sort of service that replaces a traditional bank and automatically invests balances above some figure.

      There’d be a lot of benefit to that to customers, and they could keep growing their customer base, but it’s has a very low moat.
      Oct 24, 2019
  • Uber
    😈grep

    Go to company page Uber

    😈grep
    Wouldn’t recommend it *in this market* overall I’m positive on Robinhood but give the economic climate macro factors will dominate and shape the market for equities in the near future. Track and buy if valuation drops though and then hold.
    Oct 24, 2019 2
  • Why buy private market shares? Those typically are very illiquid and have high commission. How much money do you lose if you buy those shares and sell immediately?

    There are so many public companies with more transparency and much lower transaction costs.
    Oct 24, 2019 1
    • OP
      Fair, not planning to sell immediately though. Public companies wouldn't have as much potential upswing. But I hear you, thanks for replying!
      Oct 24, 2019
  • Google
    QTOPS

    Go to company page Google

    QTOPS
    No. Startup land is overvalued. And your shares wouldn't be preferential.
    Oct 24, 2019 0
  • Microsoft
    Dr.💻

    Go to company page Microsoft

    PRE
    Microsoft
    BIO
    Previously Microsoft intern. Looking forward to work for other companies.
    Dr.💻
    That’s a good question. I’m interested to know what people think about it.
    Oct 24, 2019 0