On February 24 2021, not long after buyers using financial app Robinhood rattled money pundits everywhere, a tweet appeared to signify that something new was afoot:
Tomorrow we’ll be doing an upgrade to our systems. Buying in some stocks might be limited. Sorry for the inconvenience.
— Robinhood Traders (@TradeRobinhood) February 24, 2021
The tweet immediately received a lot of attention, including from day trader Dave Portnoy, who has had an ongoing public spat with Robinhood’s chief executive officer, Vlad Tenev:
(Archived here.)
However, this is not an official Robinhood account, as the account itself quickly made clear with a puckish follow-up tweet:
We’ve been looking at this for 29 straight minutes. Still can’t believe Dave Portnoy retweeted us. Blessed pic.twitter.com/7ZtAJTBWSv
— Robinhood Traders (@TradeRobinhood) February 24, 2021
The profile of the @TradeRobinhood account also makes clear that it is not an officially sanctioned page:
We track the gamblers and degenerates of the trading community. Not associated with Robinhood. Tweets are not endorsements
Joined January 2021
Tenev himself weighed in with a link to a video of Jonathan Frakes repeating variations on “you’re wrong”:
The account also managed to fool Joe Pompliano of sports business newsletter Huddle Up as well:
Robinhood went from a popular trading app and occasional newsmaker to a subject of a deluge of news stories worldwide in January 2021 after the controversy around GameStop (and other) stocks:
Robinhood played a critical role when a group of Reddit posters saw an opportunity to make money while also giving a jab to Wall Street and hedge funds. However, Robinhood then slowed the stratospheric rise in GameStop and other companies when it restricted users from buying certain stocks. It reversed that decision the next day and posted on its blog about what happened in all that stock trading.
The fallout has included everything from bad press to class-action lawsuits — and a discussion about who the Robinhood app is really intended for, anyway:
Payment for order flow wasn’t invented by Robinhood (that honor belongs to Bernie Madoff), but the company’s technique differs from others who use it in the industry in that it charges a percentage of the order spread. In 2020, payment of order flow has made the company a killing: for the first quarter, it accounted for $90 million in revenue for the company (70 percent), by the second it doubled to $180 million.
Payment for order flow is a wonderful system that makes a lot of money for everyone involved, except the consumer.
In December, Robinhood was fined $65 million by the Securities and Exchange Commission for “misleading statements and omissions in customer communications” about its revenue, but specifically around its payment of order flow process.
Since then, Robinhood has been both praised and criticized for its actions. However, @TradeRobinhood is not an official Robinhood account, and its tweets should be considered accordingly.