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by Cookingboy 1965 days ago
On Reddit, especially /r/wsb, many people painted it to be a common folks vs. Wall Street hedge funds story. But I've always thought the reality was that it's a hedge funds vs. hedge funds story where plenty of big players made millions, if not billions last week, then shorted the stock at $3-400 and made millions more on the way down. The retail players were probably just caught between a group of 800lbs fighting gorillas. I wouldn't even be surprised if Melvin Capital made all their money back by shorting near the peak.

Additionally I'm beyond disgusted at how "any publicity is good publicity" turned out to be so true and Robinhood came out stronger than ever from this whole debacle: https://www.cnbc.com/2021/02/03/why-investors-were-willing-t...

> “It’s the fastest growing consumer app, and has better engagement than social media,” one investor said. “The majority of those new traders won’t be trading GameStop.”

Having "User Engagement" as a benchmark for an investing app is beyond immoral. Robinhood has always been extremely predatory at encouraging users to actively gamble with their investments, and utilizes all kinds of user manipulating tactics such as gamification that has no place in a finance app.

They will have a very successful IPO, and the top shareholders/investors will make billions, all from a product named Robinhood that excels at almost nothing but transferring wealth from the masses to the elites.

And it will be hailed as a true Silicon Valley success story.

7 comments

I used to work on an investment platform and we used to say that the ideal user logged in once, invested a whole bunch and then wasn’t seen again until they had more to invest. Daily active users and even monthly active users just shouldn’t be what an investment platform aims for. It’s not healthy to constantly check your investments
Robinhood doesn’t care at all for their users, after all they and their orders are the product it sells.
A sharp contrast with the Indian "Robinhood", Zerodha, which pushes its users to not gamble and instead make measured long-term investments [0]. May be because Zerodha is not VC backed is why they've users-first mentality versus metrics-first?

[0] https://zerodha.com/z-connect/traders-zone/trading-psycholog...

On robinhood, their only sin through this whole situation was poor communication. Several firms had to restrict trading of GME and several other stocks because of clearinghouse restrictions. Robinhood was the first to try to explain publicly why they had to do that, and they explained it absolutely horribly.

With regards to treating investing like gambling, there's no real problem with that. There's definitely a market for it, and it's why /r/Wallstreetbets exists.

> With regards to treating investing like gambling, there's no real problem with that. There's definitely a market for it

There's a big problem with that, because marketing gambling to Americans is often illegal. Do people remember the poker boom and Pokerstars getting destroyed? https://en.wikipedia.org/wiki/United_States_v._Scheinberg

Like drugs, criminalisation outright creates problems. Like tobacco, allowing people to market addictions with serious adverse effects can't be allowed to continue indefinitely. This stuff should end up like tobacco in some countries: legal to sell, but not to market it, you have to ask for it.

I think it's fair to also expect a broker that courts high volume customers (which robinhood clearly did) should be capitalized to handle the volume.
That's fair, but singling out Robinhood while ignoring all the other companies affected like WeBull doesn't make sense.
> With regards to treating investing like gambling, there's no real problem with that. There's definitely a market for it, and it's why /r/Wallstreetbets exists.

There are also markets (pretty large ones too) for cocaine and hookers and human trafficking.

There is a difference between treating investment like gambling and teaching and encouraging new investors how to take unnecessary risks.

In fact, if not for the blatant hypocrisy of them doing this under this mission statement “democratizing finance”, I may be ok with how predatory they are.

The stockmarket itself is already gamification of fractional ownership of companies. Lots of people that are active on it don't realize that it is just like a casino where the house will always win and they are just there to supply warm bodies and funds. The amount of bullshit that I've heard newly minted 'day traders' spout is second to none. Lambs to the slaughter, and bragging about it all the way to the butchers knife.
That's not really it. The majority of participants in the stock market are passive investors.
If I were a conspiracy theorist I'd say the investment into Robinhood looks like the pay-off for Robinhood halting buys. Buys only, not halting trading the stock.

But I'm not a CT so who knows.

Hasn't this been debunked enough?

Sure you can believe in conspiracy not in "buy cost collateral/sell is free" but why here on HN? Isn't there a subreddit for that?

> Robinhood has always been extremely predatory at encouraging users to actively gamble with their investments

No, r/wallstreetbets was encouraging users to actively gamble with their investments, Robinhood was just allowing its users to make their own decisions, like any investment app for grown ups should.

> Robinhood was just allowing its users to make their own decisions, like any investment app for grown ups should.

They blocked purchasers from buying.

Which makes OP's point about Robinhood encouraging people to gamble with their investments even less true.
That’s just them dropping the ball when people needed it to work.

But their predatory behavior have long existed before this GME debacle. Which other “investment apps for adults” show confetti animation after a trade? Or actively have UI that go “wanna make more money? Try trade on margin!”?

This might be the case, but it could be said of any bet too that; "Oh I bet they made their money back or doubled in the end"

Trying to sqeeze a short is one thing, but trying to actively make them lose money overall is an entirely different beast and I'm not sure of any good example of when its happened.

One thing is certain, there are a lot of regular retail investors who are holding some heavy bags right now. :(

User engagement is exactly the metric you want if your true customer is a hedge fund that pays you commissions to front run retail traders.