On January 28, 2021, Robinhood cut off buying in shares of AMC Entertainment Holdings, Inc., GameStop Corp. and other popular stocks.
This caused the shares to fall, infuriating investors.
Just 3 days before, Robinhood CEO Vlad Tenev and top engineers knew the platform was under incredible stress. From an internal chat:
So, what did they do? Restrict new sign-ups? Pull some ads? No.
In fact, despite being well aware that its systems were buckling under enormous volume, Robinhood barrelled ahead to its biggest day for downloads ever.
That was January 27th. One day later, all hell broke loose.
This is but one gem from a class action lawsuit in the United States District Court for the Southern District of Florida.
As someone who invests in tech startups, I can certainly understand their desire to grow. But when your internal systems are so strained that you can barely service your existing customers, throwing gasoline on the fire isn’t the answer.
This behavior jeopardizes your reputation for the long term in order to reach a short-term goal.
Something tells me this won’t be the last lawsuit.
More on markets:
AMC Fails to Deliver Are 40,000 Times Amazon’s, Per Latest Data
Will Evergrande Spark a Global Financial Crisis?
If Citadel is Trolling on Twitter, Where Else Are They?
Photo: “Danger sign: Unprotected fall hazard” by Johnny Surabaya is licensed under CC BY-NC-SA 2.0
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