The Facebook of Finance
Allow me to make the case that Robinhood is becoming the Facebook of finance and then stick around for some thoughts on how they can avoid this fate.
Capital Thinking · Issue #779 · View online
Allow me to make the case that Robinhood is becoming the Facebook of finance and then stick around for some thoughts on how they can avoid this fate.
Will Robinhood Become the Facebook of Finance?
Ben Carlson | A Wealth of Common Sense:
Facebook is a technology company that started out by growing its user base at an extremely high rate while following a “move fast and break things” mentality.
The company seems to care more about its source of revenue (ad partners) than its users but those users don’t mind because they love the product.
Every so often Facebook finds itself in a crisis that angers a lot of people, those people share #deletefacebook on social media of all place, eventually the crisis dies down and people keep right on using it.1
Robinhood is also a technology company that has grown its user base at an exceptionally high rate by pioneering zero-commission trading.
The company seems to care more about its source of revenue (payment for order flow from Citadel) than its users but those users don’t mind because they love the app.
Every so often Robinhood finds itself in a crisis that angers a lot of people, those people angrily complain online, eventually the crisis dies down and people keep right on using it.
Inertia is a huge impediment to behavioral change but it’s not just current customers who are sticking around. This whole ordeal has only ramped up Robinhood’s user base:
Despite the backlash we're all seeing on Twitter.. #Robinhood ADDED an estimated 600K accounts on Friday of last week during the $GME chaos, per JMP Securities.
— Kate Rooney (@Kr00ney) February 1, 2021
Webull, Sofi, Coinbase, Schwab, Fidelity.. also saw an uptick. Chart says it all. pic.twitter.com/BjDAT5twKR
Ben Carlson
Photo credit: Thought Catalog on Unsplash