Robinhood’s Addictive App Made Trading Stocks a Pandemic Pastime
On March 2, just before offices shuttered across the U.S., the staff at Robinhood Markets Inc. worked long after sunset in their Menlo Park, Calif., headquarters. Executives huddled around co-founder Vlad Tenev, then disbanded to bring orders back to their teams. The company faced an emergency: A systemwide outage had disabled its online trading app throughout one of the stock market’s busiest days in months.
Spooked by the early spread of Covid-19, U.S. stocks had gone through a harrowing sell-off and then surged back. Robinhood’s malfunction consigned its customers to the sidelines while more than 14 billion shares of U.S. equities changed hands. Although Robinhood managed to restore the app’s service, its handling of the episode angered customers and drew an inquiry from the U.S. Securities and Exchange Commission, Bloomberg reported in August. (Both the regulator and Robinhood declined to comment on any investigations.)
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The incident was the first tremor in what would become a prolonged period of turbulence for the online brokerage. It had several disruptions to trading and data from March through June, which sounds like a disaster for an upstart trying to draw customers away from Charles Schwab Corp. and ETrade Financial and to position itself as the money app for millennials and Generation Z.
But no: Robinhood would become one of the Covid economy’s breakout successes. Americans marooned at home binge-watched Netflix shows, went shopping on Amazon Prime, and discovered day trading on their mobile phones. “Robinhood traders” became the shorthand explanation for the frenzy of often speculative retail investing in the pandemic lockdowns.
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