Charlie Munger on the Robinhood stock crash: “God is getting fairer”

Charlie Munger on the Robinhood stock crash: "God is getting fairer"Charlie Munger Vice President of Berkshire Hathaway On April 30, 2022, at Berkshire Hathaway’s annual shareholders’ meeting, Charlie Munger vice president of the holding company commented on the Robinhood stock crash without hiding his satisfaction. He also referred to the fact that since the debut of the Robinhood platform, the shares of the Robinhood platform have already overestimated by over 72%, and only since the beginning of this year the stock has dropped by almost 45%.

Charlie Munger is happy about Robinhood’s legacy

Munger is a declared opponent of the Robinhood investment platform, which, according to the investor, makes most of its profits by charging order flow fees, i.e. selling its clients’ orders to third parties. – It’s just terrible that something like this happens to decent citizens who want to invest their money. This is far wrong. You shouldn’t make money by taking advantage of your clients ‘ignorance,’ commented Robinhood Munger in 2021.’When you make yourself pay for the flow of orders, you actually charge your clients much more, while pretending that you don’t charge any fees. This is extremely dishonorable low behavior, so don’t be under the illusion that Robinhood deals are free, Munger said in February 2021, months before Robinhood went public in July 2021. The latest comment by Munger is a response to the rapid crash of the platform’s actions, which have overestimated by almost 30% on a monthly basis.
Robinhood Actions – Wasn’t it quite obvious that something like this was going to happen? The company’s business model was disgusting … God is getting fairer. There is some justice in this world, Munger said at this year’s Berkshire Hathaway shareholders’ meeting, referring to Robinhood’s business troubles. Robinhood shares have declined by almost 45% since the beginning of 2022, and since their debut, the scale of the sell-off indicates a correction of over 72%. – It is very tiresome that Mr. Munger misunderstands our platform as well as a customer base that he knows nothing about. No, Robinhood does not charge any commission and does not allow day trading or shorts. We have never done this. [Munger] He should just say what he really means: if you don’t look, think, or act like him, you can’t call yourself an investor. We are happy to share [z nim] our educational tools because it looks like Munger is also lost in the cryptocurrency issue, Robinhood replied in a statement.

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Robinhood is in serious trouble

The continuation of Robinhood’s decline is a reaction to the very poor results for the first quarter of 2022, during which the company was under pressure from the declining trading volume on the stock market and cryptocurrencies. In the first quarter of 2022, the company lost $ 143 million in adjusted operating profit compared to $ 115 million in profit for the same period a year earlier. Sales in the discussed period decreased by 43% compared to the previous year. Option trading volume decreased by 36%, while cryptocurrency trading revenue decreased by 39% and equities trading revenue by 73%. Robinhood also announced that the company will cut 9% of its employees to maximize profitability by the end of the year. “We all know this is an extremely difficult period for the financial markets, but no matter what, we are focused on building a company that overcomes any difficulties,” Robinhood co-founder and CEO Vlad Tenev told analysts. Munger’s strong words were somewhat neutralized by the president of Berkshire Hathaway, Warren Buffett, clearing the atmosphere among the gathered investors. – Is criticizing people wise at all? Warren Buffett asked. “Probably not, but I can’t help it,” joked Munger.
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