Re:Robinhood launches 3% checking account
by mikeryan on Thursday December 13, 2018 @12:29PM
(#18674140)
Moviepass was bought by what is, primarily, an analytics firm. Though apparently so is Robinhood.
https://seekingalpha.com/article/4205379-robinhood-making-mi...
Re:Robinhood launches 3% checking account
by tptacek on Thursday December 13, 2018 @02:27PM
(#18675191)
That's not "analytics"; that's order internalization, something almost every retail brokerage does†, both because they get paid to do it and because it improves outcomes for their customers.
† You could argue either way about whether IB gets paid to "internalize" orders or whether the order flow rebates they get are something else.
Re:Robinhood launches 3% checking account
by pbreit on Thursday December 13, 2018 @12:46PM
(#18674311)
This article implies for example that on a $10,000 trade that Robinhood would be compensated $0.80 (0.00008 per $1 of trade). That seems pretty modest.
Re:Robinhood launches 3% checking account
by dawnerd on Thursday December 13, 2018 @12:57PM
(#18674408)
Moviepass also wrongly assumed they had greater leverage with theaters. Turns out moviepass is still small beans compared to normal moviegoers.
If they had been able to work out a profit share off concessions and cheaper tickets with AMC/Cinemark/Regal/etc they might be in a different setting right now.
Robinhood doesn't make money on commissions, but they do make money with payment for order flow [1]. So they wouldn't want to put a cap on the number of trades you can make.
[1] https://www.investopedia.com/terms/p/paymentoforderflow.asp
Re:Robinhood launches 3% checking account
by tracker1 on Thursday December 13, 2018 @07:27PM
(#18677393)
With transaction fees alone, there's plenty of room to make money. A huge chunk of the population doesn't have money parked in savings/investment and literally spends nearly all of what they have coming in. Especially in younger/millennial targets.
Re:Robinhood launches 3% checking account
by y_molodtsov on Thursday December 13, 2018 @01:35PM
(#18674767)
Robinhood makes their revenue on rebate fees, it’s not illegal but considered shady by some people. Ordinary brokers generally don’t do that (although some might).
Moviepass was also bought by a financial firm... Come to think of it, they have many similarities. Both companies are basically handing out free money and it's unclear how they would make any profit. People speculate that both companies would make money by "selling data." Unless if Robinhood is doing something very illegal, there is no way that they could make enough money that way.
That said, I do think that Robinhood knows what they're doing. They're getting a lot of publicity right now. In the worst case scenario, Robinhood can cut costs by slashing interest rates and putting a cap on the number of free trades you can do. Their worth would plummet, but later investors would be the ones who pay that price. Overall, Robinhood would still be better off.