Making $$ from "Democratizing Investing” - The more risk #Robinhood’s customers take in their hyperactive trading accounts, the more it profits from the whales it sells their orders to….

Robinhood earns a majority of its revenue from Payment for Order Flow, with Citadel, Susquehanna and Wolverine accounting for more than 35% of overall revenue. 

Robinhood: Rise Of The Retail Investor

Robinhood's Revenue streams:

1. Premium subscriptions: Provides basic features like- Research reports from Morningstar, Level 2 quotes, Increase your instant deposit limit, Extended hours trading (pre-market and after hours), $1,000 of additional margin.

2. Securities Lending: Let’s its traders use margins in order to trade

3. Payment for Order Flow: Sells the order flow to bigger operators like Citadel, Point72, and others.

Robinhood has definitely democratized investing but this quote from a Forbes article perfectly encapsulates the other side of the story: “In fact, an analysis reveals that the more risk Robinhood’s customers take in their hyperactive trading accounts, the more the Silicon Valley startup profits from the whales it sells their orders to. And while Robinhood’s successful recruitment of inexperienced young traders may have inadvertently minted a few new millionaires riding the debt-fueled bull market, it is also deluding an entire generation into believing that trading options successfully is as easy as leveling up on a video game.”

It seems like Robinhood has sold the story of helping the average investor but its business model does the exact opposite: sells the little guy to rich market operators with very sharp elbows. This has also landed Robinhood in some regulatory trouble around not being able to fulfill the promise of best execution of the trades while selling the order flow. This has not caused huge troubles till now but can be fairly controversial as the company grows further.

Revenue Diversification

Robinhood earns a majority of its revenue from PFOF which again consolidated in a couple of customers. As shown in the graph Citadel, Susquehanna and Wolverine account for more than 35% of overall revenue. I believe that Robinhood must try to capitalize on its huge user base to diversify its overall revenue profile through premium subscription and securities lending. I believe that this could be achieved if Robinhood starts spending more resources on overall customer education and service. This would kill two birds with one stone as it would decrease regulatory burdens and increase user’s engagement with other paid features hence provide increased stability.

See the whole article here: Robinhood: Rise Of The Retail Investor: 

#Palantir on Fire 🔥! $PLTR Stock Claws Back , #RSI Maxed out! #SaaS #IPO’s

Palantir Stock, IBD Stock Of The Day, Claws Back As Other Top Software IPOs Struggle

REINHARDT KRAUSE

Palantir TechnologiesClA

Industry Group Ranking

* Not real-time data. All data shown was captured at 1:45PM EST on 01/22/2021.

Palantir Technologies (PLTR) marked one of last year's biggest initial public offerings among software companies with C3.ai and Snowflake stock among them. Now Palantir stock is the IBD Stock of the Day as the provider of data analytics software becomes actionable after reversing a downward trend.

Palantir, Snowflake (SNOW) and C3.ai (AI) are three software growth stocks that corrected in late 2020 as some analysts questioned high valuations following their big IPOs. But Palantir stock has clawed back.

Palantir now boasts a Relative Strength Rating of 96 out of a possible 99. Meanwhile, Snowflake stock holds an RS Rating of only 23. And C3.ai owns an RS Rating of 83.

A direct listing of Palantir stock was launched on Sept. 30 priced at 7.25 a share. In a traditional IPO, companies create new shares, underwrite them and sell them to the public. A direct listing creates no new shares and sells only existing, outstanding shares with no underwriters involved.

Palantir formed an IPO base shortly after the direct listing.

See the whole here: 

https://www.investors.com/research/ibd-stock-of-the-day/palantir-stock-claws-back-as-other-top-software-ipos-struggle/?src=A00220&yptr=yahoo

#ValueInvesting guru Seth #Klarman says @FederalReserve has broken the stock market; compares investors to ‘frogs in boiling water’

Baupost’s Seth Klarman says the Federal Reserve has broken the stock market:

‘When it comes to the value of cash flows, the vast and limitless future, yet to unfold, has gained considerable ground on the more firmly anchored present’

“With so much stimulus being deployed, trying to figure out if the economy is in recession is like trying to assess if you had a fever after you just took a large dose of aspirin,” he wrote. “But as with frogs in water that is slowly being heated to a boil, investors are being conditioned not to recognise the danger.”

Baupost’s Seth Klarman compares investors to ‘frogs in boiling water’:

The Surge in #US #MoneySupply In 2020 Was The Largest in 150 Years!

There's no free lunch. Someone will have to Pay the Piper...

"The monetary data are striking. Between March and November, the measure of broad-based money supply, M2, jumped by a sharp 24 per cent. Shockingly, the money supply surge in 2020 exceeded any in the one-and-a-half centuries for which we have data."

...

"The multi-trillion dollar war on Covid-19 was not paid for by higher taxes or bond sales to the public. But there is no such thing as a free lunch. It will be the Treasury bondholder, through rising inflation, who will be paying for the unprecedented fiscal and monetary stimulus over the past year."

Jeremy Siegel writes in the FT: https://www.ft.com/content/6536113f-f509-41e2-bee0-597ed90843b6

https://bit.ly/PangeaBlog

International Investors left holding a $10.3 billion bag of #Ant(s)

Sovereign wealth funds, private equity and asset managers have been left in limbo after investing $10.3bn into Ant International, a subsidiary of the group owned by Jack Ma, in a highly selective, offshore pre-IPO fundraising round in 2018. 

Under an arrangement between Ant and its so-called international Class C investors, the cash was put into an offshore subsidiary that owns nothing. Aside from not having voting rights, there is little detail of the commercial terms of the agreement in Ant’s heavily redacted IPO prospectus.

The result is that investors in Ant International are “screwed”, said one lawyer with direct knowledge of the situation.

See the whole story on the FT here:

https://www.ft.com/content/f0950778-450e-4ef2-804d-7e16946ac4c0

#Switzerland Latest #Coronavirus Data: Total: 470,789 Cases, 8,109 Deaths - Worldometer