Frustrated traders occasionally show up at Robinhood’s California headquarters, the New York Times reported. According to the paper, things got so bad that Robinhood eventually installed bulletproof glass near the entrance. The app pioneered free stock trading, but its game-like interface and availability of highly risky products have put it under intense scrutiny. Visit Business Insider’s homepage for more stories.
So many frustrated traders have showed up at Robinhood’s Silicon Valley headquarters that the stock-trading app had to install bulletproof glass, The New York Times reported this week. An explosion of stock market volatility as the global economy grapples with a pandemic, coupled with record unemployment, has caused a surge in interest for the app, which pioneered commission-free stock trading for a much younger audience than traditional brokerages.But as Robinhood continued to grow, it added more complex products that are inherently risky. Combined with Robinhood’s game-like interface and relative lack of educational features that are prominent on older platforms, those products mean there’s real risk of massive losses for traders, who average just 31-year-old on Robinhood.The company did not respond to a request for comment from Business Insider, and declined to share performance statistics with the New York Times about how its users fare.
Such massive risk was on full display last month, when a Robinhood trader killed himself after seeing a negative balance of six figures thanks in part to some incomplete trades of complex options products. In an interview, the 20-year-old’s family pushed for changes to the app that would not flash such balances.Following the incident, Robinhood announced a slew of changes geared at preventing similar deaths. The company said it will improve in-app messages and emails about multi-leg options spreads, add new details to better help users “understand the mechanics of early options assignments,” and is working to change parts of its user interface. When all is said and done, however, they’ll likely still be losing money on average. Research shows, time and again, that individuals picking single stocks perform worse than market indexes.Read the full New York Times profile of Robinhood’s growing pains here.