It was a frantic day of chasing after freshly-split AAPL and TSLA shares, but not for Robinhood users locked out by glitches.
Monday was brutal for stock brokerage app Robinhood. The same day the Bloomberg reported an SEC probe into March outages, Robinhood had another blackout. The go-to investing app for Millennials wasn’t the only brokerage to go down Monday as stock fever continues to boil over.
Just as freshly split Apple (NASDAQ:AAPL) and Tesla (NASDAQ:TSLA) shares hit exchanges for the first time, TD Ameritrade users also complained of slow or completely useless functions, and the inability to trade stocks.
Outages and glitches also plagued Vanguard and E-Trade as the S&P 500 Index stalled at its record high, and the Dow Jones eased back from its highest level since crashing in February.
Robinhood outages left users stranded during a frenzy of trading in extremely volatile markets this March. A slew of angry users blasted Robinhood online. Some claimed they lost tens of thousands of dollars because of the outages.
Now the SEC is reportedly investigating how the company handled them. A lack of communication from the company, in particular, is leading to outraged users. Regulators have even privately told Bloomberg they feel like a secondary customer support service for Robinhood.
Robinhood isn’t publicly-traded, but TD Ameritrade shares (NASDAQ:AMTD) suffered a 2.04% setback Monday. E-Trade stock (NASDAQ:ETFC) was down 1.01%.
Rival CashApp, on the other hand, did quite well Monday. Square stock (NYSE:SQ) was up 2.34%. No glitches or outages were reported with CashApp Investing. Outshining so many other short-circuiting trading platforms may have given the well-liked stock a boost.
Just how does ‘free’ trading app Robinhood make money? The video below serves as an explainer.
The S&P 500 Index was down 0.22% for the day, and the Dow Jones Industrial Average was down 0.78%. CashApp’s payment settlement peers didn’t do any better. Visa (NYSE:V) was down 1.71%, and PayPal (NASDAQ:PYPL) was down 0.17%.
This is Robinhood’s fundamental, existential crisis as it moves toward a likely IPO. It has prevailed as an incredibly friendly front-end platform for stock trading and pioneered zero fees. But it’s going to have to focus on being just as professional a back-end company to maintain its position in a competitive market.
The burgeoning fintech company will have to create a compelling story and palpable sign of its dogged focus on this priority to gain users’ trust. And it will have to be tested by some more server-melting trading days and not fail.
Meanwhile, Square would be well-served to keep its record squeaky clean to keep an edge over competitors.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author has no position in any of the stocks mentioned.
Last modified: September 23, 2020 2:27 PM