It was lights out again at Robinhood on Monday. For the second Monday in a row, and the third time in a week, the millennial-friendly stock trading app went down as the markets swooned over coronavirus fears.
Robinhood hasn’t yet said what the exact issue is this time around. But for the previous outages, it blamed high trading volumes that pushed its infrastructure to a breaking point. In the aftermath, the company’s founders warned of potential “additional brief outages,” noting that its engineers were now in a better position to resolve them quickly.
Robinhood has attracted millions of users, raised nearly $1 billion, and was most recently valued at $7.6 billion. For many users, the outages in the midst of a crisis force a critical question: How much of your financial life are you willing to entrust to a startup?
Jake Baumann, a Robinhood customer in Argyle, Texas, says he’s a big fan of the company’s accessible, no-fee trading. But he says the outage prevented him from exercising “put” contracts on Amazon stock Monday morning, costing him $15,000. That’s made him question his loyalty.
Baumann says his trades weren’t affected by the outages last week, and he had been satisfied by reassurances that the company was working on the technical problems. But now he’s reconsidering using the platform, wondering whether his trades were too large, given the risks. He says the answer may depend on what kind of compensation he’s offered for the trade that he could not execute. After the service hiccups last week, the company said it would offer its premium customers a free three-month subscription, worth $15.
“I feel bad,” he says. “I really believe in what they are doing. However, this is unacceptable.”
Dozens of other customers were more blunt Monday, posting screenshots on Twitter and Reddit declaring they had moved money elsewhere. A Reddit reply thread that simply echoes “Fuck you Robinhood” has attracted hundreds of participants. Last week, a Robinhood client in Florida filed a lawsuit on behalf of other traders that alleged the company was negligent for failing to provide “a functioning platform.”
By Monday afternoon, the company said most of its trading operations had been restored. The company told WIRED it was looking into the cause of the outage. It did not immediately respond to a request for comment about the lawsuit.
Robinhood is among a wave of “fintech” firms promising easier, cheaper access to financial services—everything from lending and stock trading to basics like checking and savings. The offerings tend to lack the fancy features available at more established firms, and they often come with hidden tradeoffs: Robinhood, for example, has faced criticism for selling users’ trading data to high-frequency firms on Wall Street.