Sources tell FOX Business’ Charlie Gasparino that Robinhood is looking at changes that emphasize how the platform can be used for long-term investing.<\/p>\n
NEW YORK (AP) – The bursts of confetti that shower screens of Robinhood investors when they make their first trade – and serve as the punchline for critics who say the popular app treats investing like a game – are going away.<\/p>\n
Starting this week, Robinhood will begin retiring the confetti, which was meant to celebrate customers hitting milestones like making their first deposit or enabling new features, such as upgrading to its paid gold-level membership. The last pops will go off next week, to be replaced with a suite of animations that are decidedly measured in pace, with nary a flake within them.<\/p>\n
"They're meant to be moments of pause, moments of understanding," said Rich Bessel, head of design at Robinhood.<\/p>\n
ROBINHOOD FILES CONFIDENTIAL IPO PLAN WITH SEC<\/strong><\/p>\n Robinhood's popularity has exploded since it launched in 2013. Its commission-free trades and easy-to-use app have drawn in so many first-time investors and helped it grow so fast that the company is preparing to sell its own stock for the first time in an initial public offering.<\/p>\n The confetti animations have been around since 2016, and critics say it's one of a number of techniques Robinhood uses to lure unsophisticated investors and keep them engaged with the app, where they may be making too many trades that are too risky for them. Massachusetts regulators last year cited the confetti in particular as part of a complaint they filed against Robinhood, alleging that it targets and manipulates inexperienced investors.<\/p>\n A culture has built up on the internet where people post pictures of huge losses they took from bad trades – dubbed "loss porn" – and many show screenshots of their Robinhood account balances to prove it. Robinhood allows some investors to trade stock options and to buy using borrowed money, like other brokers, which can supercharge gains and losses.<\/p>\n GET FOX BUSINESS ON THE GO BY CLICKING HERE<\/strong><\/p>\n Madhu Muthukumar, Robinhood's senior director of product management, said the confetti criticism became a distraction that took away from the encouragement the company was trying to provide as people stepped into investing for the first time.<\/p>\n The typical age for a Robinhood customer is 31, and many of them used to be among the nearly half of all U.S. households that don't own any stocks or stock funds. Experts say it's important to get more people invested in stocks, which historically have offered one of the best ways to build wealth over the long term.<\/p>\n "So we just took out the distraction" of the confetti, Muthukumar said. "For some reason, the conversation seemed centered around that."<\/p>\n GAMESTOP NAMES FORMER AMAZON EXEC TO KEY ROLE<\/strong><\/p>\n In its response to the Massachusetts complaint, Robinhood said digital confetti is legal and that the secretary of the commonwealth's securities division "also fails to appreciate that a first trade for many Robinhood customers – especially those who have been previously excluded from the markets – is an important milestone to celebrate."<\/p>\n Some research has also pushed back on the notion that traders on Robinhood are all making suckers' bets.<\/p>\n When the stock market was plunging a year ago as the pandemic panic rocked global stock markets, for example, Robinhood investors didn't dump their holdings, as the stereotype of "dumb money" would suggest.<\/p>\n Instead, they saw it as a chance to buy low and collectively increased their holdings, according to research by Ivo Welch, a finance professor at UCLA's Anderson School of Management.<\/p>\n The S&P 500 has soared more than 50% over the last year. And experts aren't universally against the gamification of investing as a concept in general, if it helps bring more non-investors into the market.<\/p>\n