Brand Suicide or Accidental Overdose?
The legend of Robin Hood is one of a heroic thief, stealing from the rich to give to the poor. This was the inspiration for the no fee trading platform bearing his name; to enable the poor to trade like the rich and benefit from free market gains in the stock market. Great branding.
Now add several colliding factors; 1) the age of social media, 2) a lot of people with time on their hands during the pandemic, and 3) a particular brand of vultureistic trading practice by hedge funds that bet on the demise of a company rather than its success, through a reverse stock trade. Enters Robinhood’s army of micro traders, motivated by social media trends, deciding in a very Robin Hood way, to come to the rescue of selected companies targeted for demise by hedge funds, namely Game Stop and AMC Theatres, and buy their shares. In the free marketplace where values are decided by the movement of money, these troubled companies shares rose to hundreds of dollars over night, to the gains of the many and the massive losses of the few. It was very Robin Hood and very on brand. Kudos!
Only, there was a problem. What Robinhood didn’t disclose clearly to its customers, and now became an issue, was that they are not pure rebels, or outsiders for that matter - in the traditional sense. In fact, they are part of the banking system, securities that require intentional delays and policing of trade. It’s about moving a lot of money, very quickly, after all. Having traded at about 30-50 million per day, Robinhood found itself overnight moving over 3 billion dollars a day. Without securities to back it up, no one wanted to touch this volume, and with twenty minutes to opening bell; Robinhood was forced to shut down trade and tell their millions of Robin Hoods: “Stop stealing from the rich!”
With their first advertisement at Super Bowl LV: “We’re all investors” they begin to travel the long road to recovery, and sobriety, to salvage themselves, and the reason they exist: The little guys no fee trading platform. As to their name, and brand, only time will tell if they can recover from what, upon careful reflection, should be diagnosed as an accidental overdose.