This seems to have been great news for Reddit, which secured a $10bn valuation on the back of the chaos. The YOLO picks shaved billions of dollars off Wall Street incumbents’ profits.
As a result, these companies’ value soared on the stock markets.
It saw amateur investors, often using trading apps, bet against traditional Wall Street investors on GameStop, AMC and BlackBerry stocks. The commotion on the WallStreetBets subreddit started in January. The GameStop trading chaos earlier this year didn’t do trading apps any favours either. “The fine imposed in this matter, the highest ever levied by FINRA, reflects the scope and seriousness of Robinhood’s violations, including FINRA’s finding that Robinhood communicated false and misleading information to millions of its customers,” Jessica Hopper, executive Vice President and head of FINRA’s Department of Enforcement, said at the time. Those failings include repeated system outages and Robinhood providing false and misleading information to customers. The case was nevertheless brought up by US financial regulator FINRA in June when it slammed Robinhood with a $70m fine for systematic supervisory failures. According to Robinhood’s IPO filing, the case has been settled.
His family subsequently sued the company for his death. In a note left behind to his family, he accused the app of allowing him to pile on too much risk. In the summer of 2020, a 20-year-old man took his own life mistakenly believing he had a negative $730,165 cash balance on Robinhood. Part of the reason is that not everyone tapping into the market via these apps can afford it, especially when the platforms glitch. Despite painting themselves as liberators bringing stock trading to the masses, doing so has cost them a lot of goodwill from regulators and traditional traders. While there’s certainly reason for these companies to be bullish, clouds are gathering on the horizon that may risk ruining the party. It enjoyed a predominantly favourable rating from Wall Street analysts this week, despite its much anticipated initial public offering failing to quite live up to expectations in July. The trading app success stories of late also cover the godfather of the personal trading boom itself: Robinhood. “Our goal is for DriveWealth to be the partner of choice to deliver the embedded investing experience of the future,” Bob Cortright, founder and CEO of DriveWealth, said at the time. Investor heavyweights Insight Partners and Accel co-led the raise, which also saw participation from SoftBank and Greyhound Capital.
ROBINHOOD APP REDDIT SERIES
While founded in early 2021 – eight years after Robinhood’s 2013 launch – and with its app only expected to hit the UK market later this autumn, Shares.io’s leadership is bullish about the opportunities for new trading apps.ĭriveWealth raised a $450m Series D round at a $2.85bn valuation on August 19. It’s hard for the average investor to know who to trust among the so-called experts and manipulation is a very real concern both as an issue of fairness in the market and its potential impact on the individual trader.” “Unregulated and unfiltered, many retail investors are turning to social media for advice that is fake news. “Relying on Reddit, YouTube, Twitter, WhatsApp and other platforms can be a dangerous way to invest,” Benjamin Chemla, CEO and co-founder of Shares.io, tells Verdict. It has essentially created an in-app community where trading enthusiasts can share tips and discuss the market, instead of having to go to places like Reddit where the advice provided may be questionable. Shares.io attempts to separate itself from the pack by combining the stock trading of its rivals with social media features.