Robinhood can’t be sued, can lose a lot of money
In October, the Securities and Exchange Commission found nothing wrong with the way the GameStop case played, at least technically speaking. And U.S. District Judge Cecilia Altonaga, reviewing the various lawsuits against brokerage app Robinhood Markets, couldn’t agree more.
“There is no doubt that the plaintiffs were gravely disappointed when Robinhood suspended purchases of meme stocks and their holdings declined in value,” Judge Altonaga wrote. “But the law does not alleviate any unmet expectation…” In November, Judge Altonaga dismissed a related lawsuit in which investors accused Robinhood of colluding with e-commerce company Citadel Securities to stop trading. buying same shares…. Robinhood welcomed the court’s new ruling. “Once again, this confirms that the baseless allegations against Robinhood have no basis,” the company said in a written statement.
Not that the news is all good for the not-so-cheerful men.
Commission-free brokerage Robinhood Markets Inc reported a net loss of $423 million in the latest quarter on Thursday, and its shares fell 15% in after-hours trading, even as revenue beat estimates analysts…. Robinhood shares fell 15% to $9.98 in extended trading after the results. The stock price when it went public in July last year was $38, and its August high was $85….
Transaction-based revenue from cryptocurrencies jumped 304% to $48 million in the fourth quarter, while equity trading revenue fell 35% to $52 million.
Hmm. I don’t know how well the former will hold up through the crypto winter, especially since
[I]Its monthly active users fell 8% from the previous quarter to 17.3 million as retail investors pulled out of the market.
Always, [CFO Jason] Warnick said “there is no suggestion that our customers are opting out.”
Really, because a significant drop in active users sounds a lot like customer churn. But again, we’re talking about a company that sees a threat for more than $7 out of $10 it receives as NBD.
Robinhood earned approximately 72% of its revenue from PFOF and other transaction rebates in Q4 2021.
He said he didn’t expect the SEC to ban the practice, but said he was confident he could find other ways to generate revenue, possibly executing client orders internally.
Of course, if that’s not enough Schadenfreude for those who believe they’ve been robbed by the nefarious machinations of Vlad Tenev and Ken Griffin, they can also profit from Gabe Plotkin’s continued setbacks.
As of the beginning of last February, Melvin had to post a return of 120% to make [recoup its meme frenzy losses]…. From February to December, Melvin posted a return of 33.2%, well beating most other funds of its type. But because January’s losses reduced the pool of money it was investing so sharply, the gains for the rest of the year did not allow the company to offset earlier losses.
Plus, it looks like January just isn’t Gabe’s month.
Melvin lost about 17% in the first three weeks of the year….
An improvement, sure, but still, if only he could read tweets like Senvest Management founder Richard Mashaal.
“[Elon Musk’s] stacking up with this tweet for us was… we all looked at each other and thought how do we do better than that? Richard Mashaal, founder, CEO and co-CIO of Senvest Management, said in an interview. “And so for that, for us, that meant peak momentum and we proceeded to exit the rest of our position.”
Tesla CEO tweeted “Gamestonk!!” January 26, 2021, after the bell. The next day, GameStop hit its closing high of $347.51 each, when Senvest abandoned his bet.
Robinhood Meme-Stock negligence lawsuit dismissed by judge [WSJ]
Robinhood posts $423 million net loss, shares sink after hours [CNN Business]
Hedge fund Melvin lost $6.8 billion in one month. Winning it back takes much longer. [WSJ]
The fund that made $700 million on GameStop knew it was time to sell after a tweet from Elon Musk [CNBC]
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