It wasn't leap year, coding error, or a hack that caused robinhoods Yesterday and today, there were massive failures that made it impossible for customers to trade stocks. Instead, the co-CEOs write: "The cause of the failure was the strain on our infrastructure – what struggled with unprecedented burden. That in turn led to on "Thunderstroke" effect – triggers a failure of our DNA system. "
Robinhood was offline from Monday at 6:30 a.m. Pacific Time to 11:00 p.m. Pacific Time and had another outage this morning from 6:30 a.m. Pacific Time to just before 9:00 a.m. Pacific Time.
The $ 912 million fintech giant will grant all customers of its Robinhood Gold Premium subscription compensation for lending money for trading, as well as access to Morningstar research reports, Nasdaq data, and major instant deposits. It offers you three months of service.
A month of Robinhood Gold costs $ 5 plus 5% annual interest on loans over $ 1,000 billed daily. Before a price change, the monthly flat fee can be up to $ 200. However, paid users only get a $ 5 discount per month for a total of $ 15. That could seem absolutely inadequate if robinhood users miss out on the buyback of stocks like Apple, which rose over 9% on Monday. Robinhood calls it a "first step".
Affected Robinhood users can contact the company here to request compensation. Below is the email Robinhood sent to customers last night.
Robinhood is also working to contact affected customers individually and is reviewing other forms of compensation on a case-by-case basis, said company spokesman Jack Randall. It is unclear whether this could include cash to offset what traders may have lost by freezing their money in inaccessible robinhood accounts during the outage.
The compensation could become a significant cost if the startup finds that many of its 10 million users have been affected. Markets hit a record $ 1.1 trillion yesterday, but some robinhood traders may not have been able to buy back as the recovery from mass sales was due to fears of coronavirus.
Now the $ 7.6 billion startup has to try to regain user trust. "When it comes to your money, we know how important it is that you have answers. The failures you have experienced in the past two days are not acceptable and we would like to keep you up to date on the current situation. , , We worked to restore the service as soon as possible, but it took a while. Too long, ”wrote co-founders and co-CEOs Baiju Bhatt and Vlad Tenev (disclosure: whom I know from college).
The founders write what exactly triggered the downtime: “Several factors contributed to the unprecedented burden that ultimately led to the failures. The factors included very volatile and historical market conditions; Record volume; and record account registrations. “After the corona virus, there was a raging retail activity. There were also sudden spikes in stocks like Tesla amid the attention of the mainstream media.
Robinhood promises, "Work to improve the resilience of our infrastructure to meet the increased stress we have experienced. At the same time, we are working to reduce interdependencies across our infrastructure. We also invest in additional redundancies in our infrastructure. "However, they warn thatAdditional short failures may occur, but we are now better positioned to fix them faster. "
The default comes at a time prone to Robinhood, as old school brokers like Charles Schwab, Ameritrade and Etrade have recently eliminated fees per trade to meet Robinhood's groundbreaking zero-commission trades. Though some of these brokers have had infrastructure problems lately, massive Robinhood failures could lead users to the established companies they may find more stable.