Robinhood outage locks users out of recovering US market
Robinhood, the $7.6 billion-valued stock trading app based in the US, was hit by a serious outage on one of the best days for US stocks since the financial crisis.
For nearly the entire day yesterday, its 10 million users were unable to access their accounts and make trades. Meanwhile, the Dow Jones Industrial Average experienced a 1,294 point gain – its biggest point gain ever according to Business Insider.
The start-up’s iOS, Android, and web apps were all down from Monday morning until the close of trading in the afternoon according to its site status. Going down minutes after trading opened, the trading app swiftly acknowledged the issue at 9:30 Eastern Time (ET). At 11:30 ET the company said it was implementing a fix, but come 16:00 major outages were still affecting customers’ access to their accounts.
“We are experiencing a system-wide outage,” said Robinhood yesterday. “We are working to resolve this issue as soon as possible.”
Yesterday was the best day for US stocks since December 2018, and the third best since 2009. The S&P 500 gained 4.6%, helping reverse the damage done to the market by uncertainty surrounding the coronavirus.
Speculation on Twitter suggests the error was down to a failure to account for the leap year, resulting in the app looking for 3/03 data instead. This same time four years ago, Robinhood customers took to a Reddit thread to complain of the app being down, suggesting this time of year has a history of creating problems for the challenger.
The company has denied that this was the error, but has not shed light on what it thinks the error was.
Customers of the trading app, who were kept to the sidelines as the rest of the market enjoyed a major points gain, were furious. Users called the platform “trash”, and many have followed a new Twitter account titled ‘Robinhood Class Action‘.
The account says it is “actively building a case against Robinhood for their negligence and late open on March 2, 2020”. It also threatens that the company has been fined before by the Financial Industry Regulatory Authority (Finra), which protects investors. This was last December when it was fined $1.25 million by the Finra over concerns it didn’t give its users the best deals on their trades.
At the time of writing, the class action account had 4,791 followers.
One Robinhood user tweeted: “This is outrageous, I’ve watch over 33% of my investments disappear without being able to do anything, because you were negligent with your servers!” Many others pointed out the irony of Robinhood’s name, criticising the company for – in this instance – stealing from rather than giving to the poor.
The big trading houses have also experienced technical issues over the last week according to CNBC, and so has fellow investment app Wealthsimple. 11:FS’s head of research Sarah Kocianski says this points to potentially larger issues, namely “are these apps fit for purpose?” and “can they actually do what they say they do i.e. let the everyday person ‘play’ the markets?”
Kocianski questions whether the trading apps are advertising falsely, but also acknowledges that the likes of Fidelity, Schwab and TD Ameritrade had issues too last week, suggesting it could be “more a case of technology can’t keep up with the markets during such high demand”.
Some users called Robinhood’s handling of the outage “absurd”, criticising its “lack of transparency” and “canned responses”.