An Addictive Trading App Gets a Quarantine Boost

trading a pandemic pastime. But now the company is trying to figure out how to make money from its devoted fans. But first, here's what happened in virus News today. US daily cases broke records topping eighty thousand on Friday and Saturday, according to data compiled by Johns Hopkins University and Bloomberg. The virus is still hitting the Dakotas, Montana, and Wisconsin hardiest, but the alarming trend has been slowly moving to Illinois, Indiana, Michigan, Ohio,

and even Pennsylvania. Cases are also rising in Northeastern states like New York and New Jersey that had kept the virus under control for months, despite the alarming rise in cases. White House Chief of Staff Mark Meadows said in an interview on CNN that the US is quote not going to control the pandemic. Meadows said that the US response

will be focused on vaccines and treatments, not containment. Meanwhile, a new study showed universal masking in the US could save some one thirty thousand lives by the end of February wary. The projections were made by some of the nation's top COVID nineteen trackers at the University of Washington

and appeared Friday in the journal Nature Medicine. Public health officials don't expect a vaccine to be widely available until March or April, which means wearing masks and other non pharmaceutical measures will likely be the only option to reduce the spread of the virus until then. The researchers analyzed how the virus spread across states, then used those data to project how mask wearing and other variables such as seasonal pneumonia and testing rates would impact virus spread in

the future. Finally, Americans are rushing to pharmacies in record numbers for seasonal flu shots public health officials say that may help avoid a so called twin demic. CVS Health has already surpassed the nine million flu shots it gave during the entire previous flu season and expects to double that number by the end of this cycle, according to a spokesman. And now for today's main story, the online trading platform robin Hood has become one of the COVID

economy's breakout successes. Americans marooned at home binge watched Netflix shows, went shopping on Amazon Prime, and discovered day trading on their mobile phones. Robin Hood traders became the shorthand explanation for the frenzy of often speculative retail investing in the pandemic lockdowns. Now in the spotlight, robin Hood is racing to prove it can manage a simple online trading platform

and overcome a reputation for poor customer service. It has paused efforts to expand into Europe and Asia and gone on a hiring spree. I spoke to reporter Annie Messa about robin Hood's next act. It's an understatement to say probably it's been an odd year for markets, but one trading app robin Hood seems to have had a particularly very good year, and I was wondering if you could talk about some of the successes it's seen. In Sure, robin Hood has been absolutely one of the breakout successes

of the COVID economy. I would say it was always out there as a popular trading app and you can trade for free, which has now become the industry standard as of last year. But retail trading really caught fire as people we're at home during COVID nineteen lockdowns this year.

So maybe you could walk us through just how robin Hood going in and what its story was up until robin Hood started in and it always staked its reputation on this idea that trading should be for everyone, Everyone should be included in investing and you know, empowered to trade stocks and other financial instruments, and that resonates with people, but but never quite like this year. So what happened this year is it just like the customers surged in

the first four months of the year. You had three million new users signing up for robin Hood accounts. Now, let's remember these investors are a little bit like smaller typically like smaller account size investors. Half of their new users were new to investing at all this year, and I think that speaks to how this has been a different year while people are you know, stuck at home during the pandemic and you know, without things like sports

games to bet on. And that raises a really interesting point. I know in your article you mentioned the quote unquote gamification of trading, and I was wondering if you might go into this concept of how robin Hood, in many ways has capitalized on on making trading essentially a game. Yeah. So robin Hood is interesting because it started as an app native experience. It was built for the iPhone, and that's different from Fidelity or e Trade, Schwab, any of

the legacy brokerages. Some of these, you know, these have decades of history, these these platforms, and they certainly were not built with originally with an app in mind. Now, of course they've got the apps of their own, but robin hoods really a standout in that it was built to be used on your phone, and the whole idea is to make trading really seem us and something a lot of the executives talked about. The executives that I interviewed for the story talked about is the idea that

they want to even make the experience delightful. That's kind of a Silicon Valley term that's thrown around on user experience. So they want to make trading delightful. Now, that's not something that you hear a lot of people on Wall Street talk about experience wise, that they want the experience of using something they're producing to be delightful to customers. But it's very Silicon Valley and it it kind of reflects the way robin Hood has laid out their app.

Now some of the differences that you might see between the robin Hood app and and maybe another kind of brokerage account. It's super easy. It takes just a couple of minutes to set up your account. Everything built really with the phone in mind, so you know, you can be sitting on the couch, lounging, on the go wherever you are, taking out your phone and trading. And it has little other quirks, like kind of cheeky little ideas like when you first place a trade, you get this

confetti blast animation. You know, you can invite friends and get a free stock for inviting your friends and it and robin Hood makes it easy to just connect contacts from your phone. It's really built more so than other investment platforms with the brand new user in mind and what we'll get this person to come back again and again.

And that also raises in an interesting perhaps comparison point of robin Hood, as you said, has done extremely well during the pandemic as people have been at home with very little else to do. Have other investment platforms done similarly well? Or is robin Hood really the standout star. Yes,

that is a really good question. It's true that while robin Hood has really captured this zeitgeist, the retail trading frenzy that we've seen this year has lifted all of those classic retail brokerages and they've all gone gangbusters this year with new accounts and and trading activity. So it's been an industry wide trend with this delightful aesthetic or experience that they're cultivating and the many kind of game

like features of the platform. I was wondering if you might dig deeper into what is a typical robin Hood user. You said that they are oftentimes first time traders, but is there anything else that makes a robin Hood user stand apart from a user to say of a traditional

brokerage or investment platform. Absolutely, while they don't release very detailed demographic data, you can tell at least by the people online and Reddit forums who are very visible robin Hood users that there is, you know, a heavy mail contingent. And I think something else that sets a robin Hood user apart from other brokerage platforms that a lot of them are are hyper connected to this entertainment ecosystem that's risen up alongside of the comeback of retail trading this year.

And by that I mean there there's been a surge of YouTube personalities, TikTok videos, even Instagram, you know financial uh talking heads that are They're just kind of a self styled, often very young group. And you know that millennial contingent is absolutely crucial to robin Hood, both millennial and gen z. But about about um their assets under

management come from millennial users. So I would say that one thing that sets apart that robin Hood demographical might set them apart from others is um these traders tend to be kind of hooked into this whole entertainment loop that's online as well on on financial markets. Now, as you mentioned one theory about robin Hood's stunning success during the pandemic was due to the fact that many other outlets for for betting or major league sports were shut

down for many months. But of course we're now starting to see a lot of those leagues restart, We're starting to see that come back into play. Has that diminished or have we seen a decline in robin hood use because of that, or or have they stayed strong even despite the return of say Major League Baseball or or football. Yeah, we're still in the early stages, and I think that it's not entirely clear what will happen to that robin Hood use after we've got sports back and you know,

in a full fledged way. But it is a really great question, I think an important one for robin Hood. You know, the idea was never for robin Hood to only be a trading app for its entire you know, growth story. Robin Hood wants to have users who grow up and kind of trust it with their financial lives, and they want to offer products like, you know down the line, like I ra A s even or you know, mortgages. So they've got bigger ambitions than this just this trading idea.

So I think that robin Hood would say, regardless of whether people stay um trading at those heightened levels that you saw during the pandemic, they have other priorities that they want to address down the line. How has I mean, in your discussions with people at robin Hood, how have they reacted to this unexpected success of and has that changed their direction at all and where to go from

here into either or further down the line. I think it has kind of knocked the socks off of people at robin Hood, you know, and and who use the app as well. It's it certainly wasn't like so many things this year. It was hardly a foreseeable occurrence. But I did talk to the co founder of lad ten Of for this piece and he said that, you know, they're they've got more on the horizon that they want

to be introducing. So they have had to stop and address some issues that have come up with their massive growth this year. And that includes things like they had a major outage in March, a big tech outage that you know, cast a chill on users and angered them certainly, and they've had issues with around two thousand in the neighborhood of two thousand accounts being hacked, and you know, Robin Hood said that that didn't have to do with

their own technology, it had to do with external emails. Still, people you know are upset with customer service, they're upset with UM some of the outages they've seen. And Robin Hood has this year been refocusing on that core brokerage product, I think, in an attempt to get things right before moving on and expanding. But you know, new new things to look out for. It might be something like, you know, an I p O possibly being pulled. Closer by wrote

a crazy year they've had this year. That was Annie Massa. And that's it for our show today. For coverage of the outbreak from one and twenty bureaus around the world, visit Bloomberg dot com slash Coronavirus and if you like the show, please leave us a review and a rating on Apple Podcasts or Spotify. It's the best way to help more listeners find our global reporting. The Prognosis Daily edition is produced by Top for Foreheads Jordan Gospure, Magnus

Henrickson and me Laura Carlson. Today's main story was reported by Annie Massa. Original music by Leo Sidrin Our Editors are Rick Shine and Francesco Levi. Francesco Levi is Bloomberg's head of podcasts. Thanks for listening, book Abo