I know Reddit loves to hate on HOOD lately. I did too, but I'm not so sure they are a bad investment.
- With many apps and services, with pretty much anything, the path of least resistance or simplicity wins customers. Robinhood still excels at providing that well.
- Amongst those caught in the craze of meme stocks, there is rightfully placed anger. If you were DCA'ing AMC or GME before the craze, got caught in that, and then couldn't continue averaging in, but only out, well… depending on timing and quantity, you could have really messed up your averages. But, I think that is a fair subset of users, and certainly a subset of future users. Point being, they marred their reputation for a while with a subset of users, but a lot of big businesses have made mistakes, damaged their reputations, and have been able to recover and rebuild their reputation.
- They're well past their lock-up period now. Insiders that were going to make their exit have closed positions, no more massive dumps, and it looks like the stock valuation itself bottomed and is turning up again.
- They're still losing money, but they also have not stopped creating new services, new features, and again they really seem to be focused on their original goals of providing simple, easy, fast solutions to people.
Anecdotally, I've had a few friends and relatives who have asked advice on semi-passive investing, looking for the easiest lowest cost, lowest effort solutions to get into accumulating stocks, investments. Everyone's perspective these days is that holding ANY cash is a fool's game and they're getting wrecked, month to month, week to week, even day to day as they watch their grocery bills, rent, utilities, fuel, everything go up. They want their purchasing power to at least remain constant, and think that investing will help. It's hard to argue against it. So, they're kind of desperate right now, not really looking for fast gains or get rich quick meme stocks. Just looking to maintain purchasing power, overcome this orchestrated inflation.
Of all the apps and brokers I've used, Robinhood's solutions still shine, they're easy to introduce to new comers, most people have heard of them, the name resonates, even if they don't understand things like payment for order flow or whatever, and new services are making it even easier to passively invest… not costing users a dime. Anyhow, that's not a pitch, but rather an observation. I've showed people various services and apps, my personal favorite being Ameritrade and Robinhood, and everyone immediately went with Robinhood for all the reasons above with generally a response like, “Oh wow, that's really clear, easy, I get it.”
But back to the real stuff.
They're losing money, still. Are they climbing out of the mess? What ways can they make money without bleeding their users?
Have they hit rock bottom or is there more fallout to come?
Can they save, rebuild their reputation? I think far as pulling back users that were caught in the meme stock craze, probably not, those users are gone, but how large is their potential market/target audience?
All in mind, can they grow? What are the risks? What are their strongest competitors and alternatives?
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