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Robinhood says users have made $25 billion through trades on its platform – but one influential retail investor warns its easy-to-use interface could spark panic-selling if stocks take a tumble


Robinhood’s mission to “democratize finance for all” through a simple mobile trading platform with zero fees has helped usher in a new generation of investors-and helped them make money along the way. But one influential retail investor is warning its easy-to-use interface could spark panic-selling if the market sees a drawdown.

According to the brokerage app’s latest IPO paperwork, Robinhood customers have made about $25 billion through trades on its platform.

The app’s commission-free trading, mobile-facing platform, and simple interface has “broken down the barriers to entry for investing,” financial content creator Kayla Kilbride told Insider. While she prefers to use platforms with more indicators for riskier options trading, she said her 131,000 followers on Tik Tok, many of whom are newer investors, love how Robinhood makes it “so easy” to invest.

But the same interface that’s made it so easy to trade may also enable inexperienced investors to panic-sell if there’s a market downturn, said Kilbride.

“I’m so nervous,” she said in a phone interview. “I’m really grateful there is an influx of people into retail trading, but I don’t know if a lot of new traders feel confident enough to live through dips….or to live through any crash.”

Robinhood has gained popularity during a time when the stock market continues to reach all-time highs. And according to a letter from Robinhood’s co-founders, over half of the customers are first-time investors. The idea that new traders won’t be able to stomach a market crash isn’t new, but Kilbride said that Robinhood’s simple interface, where your portfolio turns red if your stocks are down, may be adding to the problem.

“Obviously there’s an influx of money into the market, but I’m still afraid that as soon as people see the color red on their Robinhood app, that they’ll just sell and dip out and be really scarred by investing,” she said. “I think that, you know, just as much money as we’ve seen come into the markets, there will be that much money come out. So that’s why I like other platforms that can show you other indicators of the movement of a stock price, or, you know, don’t make it so easy to just buy or sell or swipe up like you would do on Tinder or Instagram.”

The financial content creator also said that the gamification of Robinhood’s interface is prevalent.

“There are two major indicators on Robinhood: the color red and the color green. And that is not sufficient to make educated decisions when it comes to buying, because red obviously instigates fear. If you come up to a red light and you need to stop. If you come up to a green light, it’s good to go, but that’s just not how it is with trading,” she said.

Robinhood’s gamification of investing has drawn scrutiny from regulators and lawmakers for several years. In March, the brokerage app got rid of one of its most controversial features: a confetti animation that popped up after a user’s first trade, first step with cash management, and successful referral of friends.

The investing app has created new tools to increase financial literacy, including an educational database called Robinhood Learn. The co-founder’s said in a letter accompanying Robinhood’s IPO filings that the app provides education and builds safeguards into its products so that customers are in the best position to succeed.



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