by David Kranzler
Investment Research Dynamics
“Robinhood is the poster boy for the craziest, most unregulated stock market era since 1929. That one ended in tears. This one will also.” – WallStreetOnParade.com
HOOD operates a commission-free trading app that became popular in March 2020 with Millennials and Gen-Z’ers who fancy themselves as day-trading geniuses. The Company went public in July 2021 at $38/share. Aside from the fact that HOOD is symbolic of the biggest stock bubble in history, the corporate suite is riddled with fraud and corruption.
As it turns out, the trading service is not exactly free. The bulk of HOOD’s revenues comes from routing its order flow to third-party trading firms rather than the stock exchanges. This increases the execution cost, unknowingly, for HOOD’s retail, stool-pigeon accounts. In Q2 HOOD routed 34% of its order flow Citadel (hedge fund and brokerage) and 21% to Susquehanna (options order flow).