Robinhood stock trading app confirms $110M raise at $1.3B valuation

Re:Robinhood stock trading app confirms $110M raise at $1.3B... by sigstoat on Wednesday April 26, 2017 @11:51AM (#14204048)

> Robinhood is effectively lending money with little guarantee to take anything back and no source of income.

i have not looked into robinhood's margin offering, so maybe it's very different, but in my other brokerage accounts, margin works something like this:

i buy $10k of SPY. after the trade closes, the broker says "ok, you own $10k of SPY, and that's good for another $5k of margin." so then i can go buy another $5k of whatever i want. i pay 9% interest or so on that $5k. if SPY drops in value "enough", the broker can on a moment's notice, sell as much of the SPY as they want to cover my debts.

so... they've got a great guarantee they can take it all back.

[ Parent | on HN ]

Re:Robinhood stock trading app confirms $110M raise at $1.3B... by kogepathic on Wednesday April 26, 2017 @12:07PM (#14204243)

> so... they've got a great guarantee they can take it all back.

And what of the case where the value of your SPY position falls below your $5k+interest debt to them?

Edit: derp. A margin call would cover this.

[ Parent | on HN ]