The Disgrace Of Robinhood

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The Disgrace Of Robinhood
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Whitney Tilson’s email to investors discussing the disgrace of Robinhood Markets Inc (NASDAQ:HOOD); you’ve never heard of the biggest digital media company in America.

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The Disgrace Of Robinhood

1) Trading app Robinhood (HOOD) reported earnings after the close on Wednesday and the stock tumbled more than 10% yesterday.

On July 29, I wrote:

It's a sad day in the investing world as stock trading app Robinhood goes public. As I've written many times before, I think this company is an absolute disgrace and agree wholeheartedly with Charlie Munger, who said it's "beneath contempt."

Robinhood belongs in the Hall of Shame alongside e-cigarette company Juul and Oxycontin maker Purdue Pharma for pushing products that hurt people.

Robinhood's entire business model depends on further turning our markets into, as Munger put it, "gambling parlors" – encouraging people to speculate madly by day-trading options and worthless garbage that I've nicknamed Doggycoin (DOGE-USD) and GameStink (GME).

Robinhood's earnings report only reinforced my view. To understand what a "gambling parlor" the app is, look no further than this chart:

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Ripping your customers' faces off can, sadly, be a very good business – just look at most multilevel marketers like Herbalife Nutrition (NYSE:HLF) and predatory lenders like World Acceptance (NASDAQ:WRLD). But nevertheless, I'd avoid Robinhood's stock...

The Biggest Digital Media Company In America

2) I was so happy to read this story in the New York Times about my old friend and business school classmate Ric Elias: You've Never Heard of the Biggest Digital Media Company in America. What an incredible story! Excerpt:

Lindsey Turrentine first heard of Red Ventures last fall, when it bought the venerable tech news site CNET, where she is the senior vice president in charge of content. She sat down at her kitchen table in Berkeley, Calif., and frantically started Googling to find out what it was.

Her experience wasn't uncommon. People working at the tourism guide Lonely Planet, the travel site The Points Guy and the health and medical information site Healthline were similarly blindsided in recent years, when Red Ventures bought up special interest publications in a multibillion-dollar shopping spree.

Best regards,

Whitney

Updated on

Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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