The stock market has been extraordinarily volatile lately. After one of the worst weeks ever for the market, the beginning of this week saw a very positive upswing. One of the largest single-day market growths in history made a lot of people money– if they could trade. Unfortunately, if you held all your money in the Robinhood trading app, you couldn’t. Robinhood was hit with major crashes for two days straight. These two days were both extremely lucrative for stock traders, and users couldn’t touch their funds. To explain the Robinhood tragedy further, we will check out a video by Finance YouTuber Graham Stephan. I’ve already given background on him in a previous article, so we can jump right in:
What Does This Mean For You?
Well, Graham said it pretty well himself. To summarize his take on the issue, traders should not put all of their eggs in one basket. If you are going to put all of your funds into one trading vehicle, it should be a longstanding, reliable option. I will refrain from making any specific suggestions, as I can’t vouch for any company I don’t work for. Needless to say, though, there are many storied investment companies that have built a reputation for themselves over decades, and these are safer bets than startup apps like Robinhood. So, diversify if you can, and be careful who you trust.
What Does This Mean for Robinhood?
Nobody can know for sure. With many competitors coming out of the woodwork, and many industry mainstays starting to develop new and similar features to compete, it doesn’t look great. Can they bounce back? Absolutely. The issue here is that this news is tied to one of the most historic rebounds in market history, and so it is doubtful that they will be able to make this news “go away”. Instead, they should probably make strong efforts to market what changes they are making in order to bolster their technological reliability. This is similar to what they did after their cash management hiccups, and it seems to have gotten most people on board. Only time will tell how this affects their eventual IPO, but major strides will need to be made in order to recover from the Robinhood Tragedy.