That is an insane drop. What is going on? Are they being outcompeted or simply not making money? Is their business model (being an easy to use broker for little people) simply not good?
I started trading on RH in 2019. They make investing simple and approachable for someone who like me who knew the basics and just wanted to play around a bit with some spare cash.
But after a couple years when I want to start taking it more seriously, their platform has failed to grow and improve. In the three years I've used them, I can't think of a single new feature they added that I use. Meanwhile, there are plenty of things I'd like. For example, it's beyond ridiculous that price graphs don't have their axes labeled. When selling stock, it's always FIFO, so I can't choose which lots to sell to optimize tax liabilities.
The problem is that I have a hard time leaving because their margin rates (~3%) are so damn good compared to the major players (8% or higher).
Current max is 1.83% but the more you borrow it asymptotically approaches 1%. (subject to change, same as RH)
Brokers are as behind compared to robinhood as car manufacturers are with RH.
Its just not a great business.
It was never meant to compete with real investing tools but instigate transaction fees and accumulate retail behavior data for the market makers
Oh ffs no they don’t.
See https://www.washingtonpost.com/business/2021/01/29/robinhood...
If both market maker A and market maker B offer the same price but B is going to pay them slightly more than A for your order, then they can legally route your order to B.
Many brokers do this now.
Front running is different entirely. For example, if you were about to buy a load of stock, front running would be Robinhood buying in before you, waiting for your order to clear the price level, and then selling a few ticks higher.
I really have most serious doubts about the idea that you can simultaneously get paid for order flow and deliver on your best execution obligations - the payment for order flow literally comes out of missed price improvement opportunities for the customer. FINRA seems to feel the same way and fired a warning shot over the bows last year: https://www.finra.org/rules-guidance/notices/21-23
It is fine, it is just a low marginal commodity business not likely to achieve the grandiose valuations and size its investors expect.
Which means that a 4 year stock grant worth $700k then got you 10k shares. That’s now worth $100k