Robinhood’s Outage Post-Mortem
Stocks ran up a trillion dollars on Monday, their biggest single-day gain in the history of capital markets. Every investor was out to play, but as fate would have it, a seventeen-hour power outage for Robinhood left tens of millions out of the action!
Robinhood is the go-to broker these days, but its user base could only watch as untold sums came and left their trading accounts on Monday. Social media was enraged, and class actions were drafted, but finally, the dust has settled.
Off duty software engineers have been scanning Robinhood’s now-infamous “Black Monday” data logs, and they reckon that someone backstage forgot to code in the leap year. Servers spewed errors all day in their efforts to fill requests for the 3rd of March. Except, it was only the 2nd of March!
The good news is that long-term investors don’t need the stock market to be open for their stock picks to do well. Business goes on, and cash registers ring. Action on the ground drums up sales which are all booked in a ledger. Operating profit is hauled in, and the intrinsic value of owning a share of the business increases. It doesn’t matter if quotrons aren’t quoting.
The catch yesterday was that following the quickest sell-off since the financial crisis, many traders were poised to capture the bounce back as markets found new levels of technical support. Unable to cut losses, some contrarians lost thousands.
Robinhood notoriously offers zero commissions, but many users “want their money back,” and investors in other brokerage competitors say there could be a mass exodus of users transferring from Robinhood if it doesn’t waive its remaining fees.
It just shows that sometimes you’re better off going for the established brands that are even a little behind, instead of their mistake-prone, innovative younger disruptors!