Robinhood is running this transfer deal right now, where if you pay for their $5/month Gold membership, they’re offering 3% on Roth IRA transfers, with no limit.
Move a million dollars and get 30k. How is this even sustainable for them? Feels like one of those too-good-to-be-true promotions.
They make a lot from monthly fees, order flow, and they hold a ton of cash.
Ren said:
They make a lot from monthly fees, order flow, and they hold a ton of cash.
They also increase bid-ask spreads…
Ren said:
They make a lot from monthly fees, order flow, and they hold a ton of cash.
They also increase bid-ask spreads…
That’s the real issue here. Try getting a limit order filled on a quiet day—it’s almost impossible.
Ren said:
They make a lot from monthly fees, order flow, and they hold a ton of cash.
Does anyone actually move a million to Robinhood? I feel like it’s mostly for younger folks playing with meme stocks. But I’m sure they can tap into plenty of credit lines if needed—they’ve got a market cap of $24 billion.
@Oli
I’m guessing they’re counting on most people not moving huge sums over. Or maybe they’re using some kind of leverage to make it happen.
Nicole said:
@Oli
I’m guessing they’re counting on most people not moving huge sums over. Or maybe they’re using some kind of leverage to make it happen.
Exactly. I’d be tempted by the 3% too if I were in the US, but it would have to be a large amount of money. And then I’d start thinking, ‘What if something goes wrong at this platform, and I’m left regretting it?’
@Oli
$24 billion market cap, and you call it a sketchy platform? Really?
Jesse said:
@Oli
$24 billion market cap, and you call it a sketchy platform? Really?
I mean, it’s got its share of issues. People remember the meme stock freeze from back in January 2021.
@Nicole
All brokers paused trades during that. Robinhood wasn’t alone.
Jesse said:
@Oli
$24 billion market cap, and you call it a sketchy platform? Really?
Yeah, remember Enron.
Jesse said:
@Oli
$24 billion market cap, and you call it a sketchy platform? Really?
Look at FTX… no one thought it was sketchy until it crashed.
Jesse said:
@Oli
$24 billion market cap, and you call it a sketchy platform? Really?
Look at FTX… no one thought it was sketchy until it crashed.
FTX was a red flag from the beginning.
Jesse said:
@Oli
$24 billion market cap, and you call it a sketchy platform? Really?
Robinhood paused trades during the meme stock frenzy because their prime broker couldn’t cover their losses. Plus, most of their revenue comes from selling order flow, which lets market makers manipulate prices. They’re basically enabling bigger players to profit at the expense of everyday traders. How can you not find that sketchy?
@Dru
Isn’t that what every other platform does though?
Rowe said:
@Dru
Isn’t that what every other platform does though?
Sure, but Robinhood’s been caught doing it more blatantly. Are you Vlad?
@Oli
I’m guessing they’re making money by loaning out shares, probably without telling people—or maybe it’s buried in the fine print.
Tal said:
@Oli
I’m guessing they’re making money by loaning out shares, probably without telling people—or maybe it’s buried in the fine print.
You do have to agree to securities lending, but I think it’s selected by default. I don’t recommend enabling it, though, since you could lose SIPC coverage on lent shares, and Robinhood takes 85% of the profits.
@Han
Most of the complaints about Robinhood are from when they paused trades during the meme stock frenzy. That’s only a problem for a small group of people.
