The last couple days were a boon for stock marketeers in the US. The sudden Fed rate cut, meant as a measure to arrest the coronavirus-drive fall of stock markets, led to massive upswings across almost all major indices in the U.S. However, if you relied on the ‘Robinhood’ trading app for your trading needs, your story must have a different ending(spoiler, it’s not very pretty).
Robinhood saw ‘major outages’ for two days in tandem, and what’s worse is those were the worst two days for this shutdown. The S&P 500 gained about $1.1 trillion dollars on Monday, and while all this practical loot was up for grabs, Robinhood users were dealing with other issues. On Monday, according to CNBC, a colossal 10.8 billion shares were exchanged among traders, 50 percent higher than the 50-day moving average.
On Monday, users started posting error messages on twitter and other social media platforms that they witnessed on Robinhood. At first, the company denied any faults and said that all services were “operational”. However, later the company reported on its website that it was “experiencing a system-wide outage”. It was at about mid day that the company said that the underlying issues had been “partially resolved”. Still, the 17 hour outage faced massive refute from Robinhood’s 10 million customers.
The company issued a statement saying “We realize we let our customers down, and we’re committed to improving their experience.” Robinhood also said that the issue has been fixed and the platform is up and operational again. However, this was right before the platform went down again on Tuesday, making stock marketeers even more furious.
Many publicly expressed their disregard for Robinhood and the shutdown, with others threatening to take the startup to court. However, it is unlikely that any legal case against the company(and especially the technical outage) will stand, as the company’s policies specifically state that it will not be responsible for “temporary interruptions in service due to maintenance, Website or App changes, or failures.” Robinhood does “not warrant that these channels will be available and error free every minute of the day.”
Robinhood also issued out a statement in an email, assuring its users that no personal data has been leaked. The company has also said that it will be dealing with customer complaints on a “case to case” basis. Still, users are livid, and the ‘good image’ of the brand might be tarnished for a long time.
Robinhood is a free-trading app that lets investors trade stocks, options, exchange-traded funds and cryptocurrency without paying commissions or fees in the U.S. Its pretty similar to how Zerodha works here in India. Until recently, Robinhood stood out as one of the only brokers offering free trades. Robinhood came out as an app that has changed how stock brokers operate, forcing more and more online platforms to eliminate trading commissions and fees.
The company was last valued at $7.6 billion after a Series E funding round last year led by DST Global. Venture capital firms like New Enterprise Associates, Sequoia and Ribbit Capital are also investors.
A Robinhood spokesperson said the outage was caused by “infrastructure that allows our systems to communicate with each other.” That resulted in outages across other services, “preventing customers from using our app, website, and help center,” according to the company. As far as compensation, a spokesperson said Robinhood was reaching out to customers on a “case by case” basis.
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