Pro: Robinhood is training people to see the stock market as a casino
- Charles Duhigg explains why he doesn't like what Robinhood is doing.
- He says Robinhood is not playing its role in educating people to invest wisely.
- Shares of the financial services company are down about 3.0% on Friday.
Robinhood Markets Inc (NASDAQ: HOOD) claims to be an industry disruptor as it democratized finance for everyone, but the New York Times bestselling author, Charles Duhigg, is not convinced of what it’s doing.
Duhigg’s remarks on CNBC’s ‘TechCheck’
On CNBC’s “TechCheck”, Duhigg warned that Robinhood was essentially training an entire generation to see the stock market as a casino.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
When you come out of the casino, you’re hungover, you feel terrible and commit to never coming back to Vegas again. What we don’t want is to train an entire generation to never want to come back to the stock market because they played with it in Robinhood and got burned.
Robinhood has already faced $100 million in fines for “systemic supervisory failures”, and Duhigg expects the lawmakers to further crackdown on the financial services firm.
Robinhood doesn’t educate people to invest wisely
Duhigg advocates the need to educate people to invest wisely – a role that he says Robinhood is far from serving.
Robinhood’s big claim to fame is that it’s democratized access to finance. But making something easier to buy doesn’t mean that it’s a good idea to buy it. Oftentimes, when things are easier to buy, people who buy them are those who don’t understand what they’re buying.
Shares of the company that crowns itself as the pioneer of commission-free trading are down about 3.0% to $40 on Friday. JPMorgan’s Worthington rates the stock at “sell” with a price target of $35 that represents an over 10% downside from here.