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Illustrations: Shira Inbar

How Robinhood Convinced Millennials to Trade Their Way Through a Pandemic

The $8.3 billion stock trading startup fumbled into the financial crisis — and is now winning it

If there was a day everything changed for stock traders, it was Monday, March 2. The prior week, a Centers for Disease Control official warned that as the coronavirus pandemic sweeping Asia and Europe spread in the U.S., “disruption to everyday life may be severe.” China reported 202 new Covid-19 cases, bringing the total there to more than 80,000 despite massive lockdowns. Hundreds of new cases were confirmed in Italy; deaths were reported from Australia to South Korea; and cases in the U.S. tipped past 100. The S&P 500 had fallen for five straight days, plunging nearly 10% on spiking volume. For anyone working the markets, this would be the day to be ready for action.

The service suffered an outage that lasted not an hour, not a couple of hours, but the entire trading day.

But surprisingly, that pessimism was misguided. Even as Robinhood experienced another hours-long outage the next day, and a third the following week, it claims that user growth was ultimately unaffected. “We’ve seen record trading volumes and record depositing activity,” Robinhood co-founder and co-CEO Vlad Tenev maintained in a late-April appearance on Jim Cramer’s CNBC show. Tenev, whose mussy shag cut and trim goatee made him disconcertingly resemble the folkloric outlaw his company is named after, underscored that Robinhood “has continued to have over 50% of the market share of new brokerage accounts,” more than “all of the incumbent legacy providers put together.”


The underserved market segment Bhatt and Tenev had in mind wasn’t the financially disadvantaged underclass, or even the financially stressed working class. It was young people.

Like the protesters, Bhatt says, many of their classmates, colleagues, and peers seemed to think the financial system was hopelessly corrupt and unfair, and needed to be torn down. “We could understand the motivation behind that sentiment, but at the same time we had a fundamentally different view — one that I think was more optimistic,” he continues. “Rather than tearing the whole system down, what we could do is something really concrete — which is give more people access to it.”

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“Free apps and this bull market are bringing the ability to make foolish decisions to an ever-broader swath of people.”

This did not slow the firm’s momentum. Robinhood won’t comment on whether it’s profitable, but entering 2020, it claimed 10 million users. An Apptopia analysis in January found that the company had more mobile monthly active users than all of its “legacy” rivals combined. These days the median age of Robinhood customers is 31. Bhatt and Tenev’s vision had essentially come true.


Among people earning $35,000 a year or more who received a government stimulus check, many used at least some of that money to buy stock.

“These are unusual times,” says Terrance Odean, a finance professor at the University of California, Berkeley. For some, Odean continues, moving in and out of stocks has always been more a form of speculative entertainment than wise investing for some. But lately, many people have been stuck at home, bored. As one equities researcher observed to Barron’s, plenty of sports bettors are looking for an adrenaline rush in a world absent of prominent games. Those who’ve lost jobs are watching their bank accounts drain. Whatever their drivers, new investors are surging into the market. In May, an analysis from software and data aggregation firm Envestnet Yodlee found that among people earning $35,000 a year or more who received a government stimulus check, many used at least some of that money to buy stock. Overall trading volume hit $14.6 trillion in March — double the volume a year earlier. April volume was up 50% over 2019.

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It is about giving more people a feeling of access to the means that might someday rocket them into the top 1%, too.

Surely some chunk of Robinhood’s millions of users are investing for the long haul, believing that over time some equities being punished today might be bargains. Various airlines, Carnival Cruises, and Disney are all popular with Robinhood users, as are traditional standbys like Apple and Microsoft. But as Tenev told Cramer, users are lately trading at record volume, suggesting that buy-and-hold isn’t the only strategy in motion right now. Nor are blue chips the only stocks in play. “We generate a ludicrous amount of trades in $1 to $5 stocks,” Bhatt has said. “Because we’re free, we’re the only place where you can day trade stuff like that.”

Written by

Senior writer for Marker by Medium. Longtime contributor to The New York Times (Workologist, Consumed). Author of The Art of Noticing (Knopf). RobWalker.net

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Written by

Rob Walker

Senior writer for Marker by Medium. Longtime contributor to The New York Times (Workologist, Consumed). Author of The Art of Noticing (Knopf). RobWalker.net

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