Robinhood raises $320M more, bringing latest round to $600M at $8.6B valuation

I've spent most of the last decade making fun of Robinhood, but their expansion to new markets, and user experiences, have been a force of change that I must commend!

I can gladly sell my order flow for in exchange for a more efficient and liquid options market with no commissions, it makes many more theoretical strategies much more viable, and allows for risk management possibilities I could only dream of. The liquidity of course comes from Robinhood users and I rarely use Robinhood myself, but my preferred platforms do charge for options contracts, so there is a use case for some activity on Robinhood if I use many contracts.

The way they monetize user data as a primary business model is novel for a brokerage firm, and very similar to adtech and big tech but with just a few much more lucrative clients that would probably pay even more than they already do for that edge. At the same time, selling client order flow in a nice easy package is probably the only data brokering that seems fair and will survive regulatory scrutiny when user data-property rights gain legislative foothold.

> The stock is trading at 166 times estimated earnings over the next year, 20 times book value and seven times sales.

This will be an unpopular opinion, but there should be more barriers to entry to trading securities on the markets. The hyper democratization of the stock market will only increase the frequency and the magnitude of stock bubbles, which distorts the markets. This is because most people are fad followers. Herd behavior makes markets inefficient.

Meanwhile - “They make it so easy for people that don’t know anything about stocks,” he said. “Then you go there and you start to lose money.”

https://www.nytimes.com/2020/07/08/technology/robinhood-risk...

I wonder at what stage regulators come and start destroying the simplicity? Like Zoom initially unsecure but user-friendly has recently become an enterprise-grade confusing-to-use tool.