Robinhood’s Hero to Zero Moment: The Information’s Tech Briefing

Talk about self-immolation. Robinhood’s decision to restrict trading in GameStop and other “meme” stocks seems guaranteed to alienate a big chunk of its user base. Who would go back to a trading platform responsible for losing them money, no matter the explanation? This also can’t bode well for its hopes of going public.

Late today the company said it would allow “limited buys” of the stocks tomorrow. More significantly, Robinhood indicated that its decision was related to its need to comply with capital obligations imposed by the SEC, which it said “fluctuate based on volatility in the markets and can be substantial in the current environment.” That could be a sign Robinhood doesn’t have the deep pockets to support the business at its current size. In that case, maybe it should find a buyer (last valuation was $11.7 billion).