Vlad Tenev, chief executive officer and co-founder of Robinhood Markets Inc., during an interview at the company's headquarters in Menlo Park, California, US, on Thursday, July 21, 2022. Investors will be looking for signs that Tenev is making progress on a turnaround when Robinhood reports second-quarter results. Photographer: David Paul Morris/Bloomberg via Getty Images
Photo: David Paul Morris/Bloomberg via Getty Images

Robinhood’s IPO was a year ago. It’s not a happy anniversary.

Protocol Fintech

Good morning, and welcome to Protocol Fintech. This Friday: one year after Robinhood’s IPO, Voyager gets slapped by the FDIC, and Lemonade’s cheap Metromile deal.

Off the chain

You’d think Voyager would try not to push legal boundaries while in bankruptcy. Not so. The FDIC and Federal Reserve ordered the crypto lender to stop claiming deposits were insured in a joint letter Thursday. Voyager has long suggested to customers that dollar deposits were FDIC-insured, and it repeated those claims in communications about its bankruptcy filing, where it stressed that dollar balances were handled by its bank partner, Metropolitan Commercial Bank. But that bank hastened to tell Voyager customers that the insurance only covered its own failure, not Voyager’s. The FDIC announced new guidelines in May for going after false advertising claims related to its deposit insurance. Voyager makes for an excellent test case.

— Owen Thomas (email | twitter)

Robinhood’s rocky year

A year after Robinhood’s rocky stock market debut, the pioneering trading app’s ride as a public company has only gotten bumpier. There’s not much to celebrate on the first anniversary of its IPO Friday, as it continues to grapple with sharp revenue drops and a blurry path to profitability.

The rosy economy that set the stage for its IPO is gone. Instead, Robinhood finds itself in a stock market slump that has shaken the confidence of the new wave of young investors who had fueled its explosive growth and a discouraging economy marked by inflation, rising interest rates and recession fears.

Wall Street’s skepticism never really went away. There are two takes on Robinhood: It’s a trailblazer in commission-free trading that made it super easy for young, first-time investors to buy and sell stocks on their smartphones. Or it’s an unethical innovator that turned trading into a dangerous game.

  • The “gamification” charge gained more momentum in January 2021 with Robinhood’s controversial response to the GameStop trading frenzy just as the company was gearing for its IPO.
  • It was a disappointing debut. Robinhood stock, which opened at $38, tanked on its first day of trading. It then briefly touched $85 before plunging to around $8 this week. (See the chart below.)
  • Other hurdles emerged. Critics argued that Robinhood’s main revenue driver, payment for order flow, creates incentives for users to make as many trades as possible. The SEC threatened to ban the practice. As more players tried to build financial super apps, more competition emerged: Even PayPal has considered adding stock trading.
  • Robinhood pivoted sharply to crypto, even rolling out its own crypto wallet. But Robinhood’s ride on the crypto roller coaster was brief. Trading revenue collapsed as crypto winter set in. The same young investors who jumped from meme stocks to altcoins felt equally burned.

Robinhood is having a tough time winning Wall Street back. Investor sentiment continues to “skew negative,” Goldman Sachs analysts said in a June note which cited trends that “could be disappointing to investors.” Robinhood will report second-quarter results on Aug. 3.

  • Its performance has been so wobbly that the company announced in April that it would no longer provide revenue guidance. Instead, the company will disclose “certain limited-purpose statistical and operational results on a monthly basis.”
  • The company plans to focus on the investing needs of the 23 million or so customers who have Robinhood accounts, CEO and co-founder Vlad Tenev told Bloomberg. The problem is those users appear to be losing interest in stock trading. Robinhood reported that its monthly active users have fallen from 21 million in mid-2021 to around 16 million in the first quarter of this year.
  • Logan Allin, founder and managing partner of Fin Venture Capital, argued that Robinhood has “lost the trust of the next-gen investing community.” The problem, he said, was that Robinhood “was always about gamification, and that clearly isn’t going to end well for the team, users or shareholders.”

Other companies have bounced back from a lousy first year as a public company. It took Facebook more than a year to get back to its IPO price. Tenev is optimistic, telling Bloomberg that, for Robinhood, “there’s a lot more to come.” He argued that “you can’t run a business with your emotions being driven by how the stock market is doing.” But Allin says it’s tough to view Robinhood’s dramatic decline since its IPO as anything but “a spectacular fall from grace.”

— Benjamin Pimentel (email | twitter)


Chip shortage could undermine national security: The global shortage of semiconductors has impeded the production of everything from pickup trucks to PlayStations. But there are graver implications than a scarcity of consumer goods. If the U.S. does not ensure continued domestic access to leading-edge semiconductor manufacturing, experts say our national security could suffer.

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On the money

Mastercard spending is rising. The payments giant said network volume climbed 18% in the second quarter to $1.65 trillion. CEO Michael Miebach said travel spending was particularly strong.

Jack Ma plans to cede control of Ant Group. Sources told the Wall Street Journal that Ma plans to relinquish control of the fintech giant in an effort to distance it from affiliate Alibaba Group, which is under pressure from Chinese regulators.

Apple and Google are under pressure to address crypto scam apps. Sen. Sherrod Brown, chairman of the Senate Banking Committee, sent a letter asking the two tech giants what they are doing to prevent fake crypto apps he said have robbed investors of at least $42 million.

Lemonade has acquired Metromile. The all-stock deal valued at $145 million will expand Lemonade's car insurance business with a pay-per-mile option. Lemonade acquired the insurer, which went public through a SPAC deal last year at a valuation of $1.3 billion, for less than the cash on its books.


The buzz about bitcoin in Niagara Falls, New York, isn’t good. Mining facilities there are generating unwelcome noise, prompting the city to pass a moratorium on new crypto facilities. "I used to hear the Falls from my backyard … now I hear bitcoin,” one resident said at a city meeting.

Mastercard CEO Michael Miebach is ready to take on critics of credit card fees. “Overall, the concept of interchange is a balancing factor. And the ecosystem is one that has served the ecosystem, including the consumers, well,” he told investors in response to a question about a forthcoming bill to rein in interchange costs.

The chart

Robinhood had a short honeymoon after its blockbuster IPO. Not long after it went public, it started warning that the meme-stock phenomenon that lifted its revenue might not last. A dogecoin fad that boosted its crypto revenues also faded. Those ominous forecasts came true, perhaps faster than Wall Street anticipated.


Chip shortage could undermine national security: To ensure American security, prosperity and technological leadership, industry leaders say the U.S. must encourage domestic manufacturing of chips in order to reduce our reliance on East Asia producers for crucial electronics components.

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