Robinhood Loses Over 1 Million Active Users. Is the Memestock Mania Over? (sfgate.com) 23
A Bloomberg opinion columnist calls the RobinHood stock-trading app "a symbol of the 'memestock' boom that galvanized a generation of bored locked-down day traders.
"But judging by the company's latest figures, the mania is over." In the first quarter, Robinhood's monthly active users fell 10% year-on-year to 15.9 million, the lowest since the end of 2020. It's a loose metric, to be sure, covering debit-card swipes and webpage log-ins. Net funded accounts have held steady, but activity is flatlining: Transaction revenues fell by almost half, and average quarterly revenue per user slumped 61% to $53. In a post-lockdown era of rising inflation, consumers have less money and fewer hours to spare. Eyeballs and finger-swipes are not guaranteed.
This will put Robinhood's premium "tech" valuation — around seven times annual revenue, a higher multiple than Meta Platforms Inc.'s — under extra pressure. Shares of the financial-services company have already fallen 71% in six months, a drop that began well before Ukraine.
With fewer reasons to get excited about risky, hyped-up trades such as bitcoin (down 40% since October), the feedback loop of fear is spreading. Trading platform Coinbase Global Inc., which like Robinhood went public last year amid a retail-driven frenzy, is down 62%.
The average Robinhood user is 31 years old with an account balance of $240. It's a band of merry men (women are a minority on the platform) who dabble. While the company's business model differs from that of social-media and streaming apps, the reversal of fortunes looks a lot like the post-Covid "attention recession" that's also battering the likes of Netflix and Spotify Technology.
"The lost merry memestock men already appear disillusioned," the columnist argues. "What happens next, if speculative bets keep deflating, may swear them off trading for good."
But he also sees Robinhood is "talking up its appeal to paid 'Gold' customers and is launching a more diversified, bank-like suite of products. With its recent announcement of a new debit card, Robinhood no doubt aspires to become a super-app like unlisted fintech Revolut, valued at around $33 billion, according to CBInsights."
"But judging by the company's latest figures, the mania is over." In the first quarter, Robinhood's monthly active users fell 10% year-on-year to 15.9 million, the lowest since the end of 2020. It's a loose metric, to be sure, covering debit-card swipes and webpage log-ins. Net funded accounts have held steady, but activity is flatlining: Transaction revenues fell by almost half, and average quarterly revenue per user slumped 61% to $53. In a post-lockdown era of rising inflation, consumers have less money and fewer hours to spare. Eyeballs and finger-swipes are not guaranteed.
This will put Robinhood's premium "tech" valuation — around seven times annual revenue, a higher multiple than Meta Platforms Inc.'s — under extra pressure. Shares of the financial-services company have already fallen 71% in six months, a drop that began well before Ukraine.
With fewer reasons to get excited about risky, hyped-up trades such as bitcoin (down 40% since October), the feedback loop of fear is spreading. Trading platform Coinbase Global Inc., which like Robinhood went public last year amid a retail-driven frenzy, is down 62%.
The average Robinhood user is 31 years old with an account balance of $240. It's a band of merry men (women are a minority on the platform) who dabble. While the company's business model differs from that of social-media and streaming apps, the reversal of fortunes looks a lot like the post-Covid "attention recession" that's also battering the likes of Netflix and Spotify Technology.
"The lost merry memestock men already appear disillusioned," the columnist argues. "What happens next, if speculative bets keep deflating, may swear them off trading for good."
But he also sees Robinhood is "talking up its appeal to paid 'Gold' customers and is launching a more diversified, bank-like suite of products. With its recent announcement of a new debit card, Robinhood no doubt aspires to become a super-app like unlisted fintech Revolut, valued at around $33 billion, according to CBInsights."
Reality has set in. (Score:3)
Disclaimer: I also got in right after the Pandemic crash and am not feeling as confident given current climate, but I chose a grown-up platform that doesn't make trading look like a video game.
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And Robinhood is only associated with meme stocks through hatred, unending and vast. Robinhood is the one that turned off the buy button during the GME run-up in early 2020. Meme stock "Apes" hate Robinhood with a passion. The fact that mainstream financial media is reporting problems with Robinhood as being a death knell for meme stocks really just shows that mainstream financial media is in bed with the big short hedge funds.
Robinhood (Score:2)
I just opened my Robinhood app. (And thus "became an active user" again.) This was to sell and withdrawl the $5 I have on there, from their "free stock".
Then I remembered it's the weekend, and the stock market is closed. Are they even trying to compete with crypto markets, that are open for trading 24/7?
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Have people outside of Reddit not heard the news? (Score:1)
Robinhood is the frontrunning evil exploiter of small-time traders. The attempt to declare the "meme stock mania" over plays right into their books, because they need these stocks to crash or Robinhood and their financial backers will sink into the hole they've been digging all this time by shorting, nekkid. I get why Bloomberg, who is firmly on the side of big money, would report this nonsense, but why is it here?
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Yes. How could they make such an obvious mistake? Users are simply moving to a different broker. But I guess that’s what you can expect when you’re getting your financial news from San Francisco, a failed city.
Makes sense, they are losing their advantage (Score:4)
When they opened, they had the big advantage of having a slicker interface and allowing to do trades with zero commission. Now all big guys have caught up
Lately, most major stock brocker offers zero commission, a lot even do fractional sharing. Some even do slices like M1.
With all outages, negative publicity orders going through dark pools, them being hacked, not having proper customer support, they are losing their edge.
Meanwhile, having an account with the big guys allows if all fails to walk into an office and get service. They also are modernizing their interfaces (even if they are still ways to go)
Hold On... (Score:3)
Are you trying to tell me that people don't like being stuck behind the market and being unable to withdraw their funds promptly if there's a market sell-off? HOLY SHIT STOP THE PRESSES!!!
Robinhood is a story as old as time (Score:5, Insightful)
"Memestock"?! (Score:2)
Serously, WTF?
The mania is over, because the market is down (Score:5, Insightful)
Those new to investment or speculation flocked to the likes of "robinhood" - if you got in at the right time, it looked like such an easy way to make money.
To be able to "play" the seasoned investors.
That was then, this is now - what these "n00bs" didn't account for, was ... the market.
It ebbs and flows, up and down, incredibly complicated - like the weather and the climate.
In a way, it mirrors cryptocurrency - clueless "investors", lured by "easy" profit, jump into the market.
Some of the lucky ones get in early and sell high, but the vast majority time it wrong, buying into the mania when it has already peaked.
It was a flash in the pan, it's over.
This "memestock" mania was manipulation at its most effective, goading n00bs into a sense of superiority, that they could thwart the market. "power to the little guy!"
The reality is, they were gamed - as indeed were some more seasoned investors.
My belief is that cryptomania and also the ease at which individuals can invest, spurred this on.
A mobile phone app, easy access to deposit, a meme driven society, all pivoted together to form a perfect storm.
It is no wonder that clever folk found a way to whip this up and manipulate it, under the guise of "socking it to the man".
Guess what ... a tiny percentage of people got very rich off the back of it, an even tinier percentage "lucked out", the majority saw their ass and lost money.
What the "n00bs" never understood, was manipulation and market forces. Speculation is just gambling. Investing takes YEARS of practice.
Meh.
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Re:The mania is over, because the market is down (Score:4, Informative)
Most people who jump into an app like Robinhood, with barely-any financial education, are aiming for a huge win. They expect they can spend a little money, see it explode in value, cash out, and celebrate all the way to the bank. That is what "investing" means to them, precisely because they don't actually know what "investing" actually means.
Riding the waves of the ever-fluctuating market means having the discipline to buy when the market is down and falling, and to hold what you have bought for years or decades. Those who do not have the patience to play the long game should not enter the market, because they will get fleeced.
And. of course, there is the issue of vetting your investments before you make them. THAT takes effort, making it undesirable for those how think of investing as an easy shortcut to great wealth.
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All retail "investors" are clueless and Wall Street makes absolutely damn sure they remain so. The gap in available information between Wall Street and retail investors is vast. If you think you're one of the clever or knowledgeable "investors" you're wrong. In every single sense of the word. You are just gambling exactly the same as they are just over a longer time frame.
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Dunno (Score:2)
Is the Memestock Mania Over?
Is using a meme brokerage firm over?
big think (Score:2)
Have they considered their users don't like being arbitrarily prevented from selling?
Or that stealing ("Forcibly selling") their users stocks might be a bad idea?
YOLO's blew their brains out (Score:2)
Memestock people don't trust Robinhood (Score:1)
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