Charlie Munger’s Opinion About
HOOD -2.82%
Markets Inc. has not improved in the past year. If anything, it has become more negative.
“Obviously something similar is going to happen,” Munger said, during a Q&A with Warren Buffett, the chief executive officer and chairman of Berkshire Hathaway.
“All the short term gambling and big commissions and hidden kickbacks and so on and so forth. It’s disgusting,” said Munger.
Mr. Munger has criticized Robinhood before. In one Interview February 2021 to The Wall Street Journal, he compared the platform to race betting and said it was purely speculative.
Mr. Buffett reminded him of earlier remarks on Saturday.
“And now they are unraveling. Mr. Munger said.
His comments come two days after Robinhood reported its sales down to $299 million in the first quarter, down 43% year-on-year. This is the company’s fifth consecutive quarterly decline.
The online trading app, which says it offers a commission-free experience, also said last week that it will fire 9% full-time workers.
Jacqueline Ortiz Ramsay, Robinhood’s head of public policy, hit back at Munger’s most recent comments.
“It is exhausting to see Mr. Munger misidentify a platform and customer base that he knows nothing about,” she said in a written statement. “He should just say what he really means: unless you look, think and act like him, you cannot and should not be an investor.”
Her statement this weekend echoes the response she gave more than a year ago when Mr Munger began criticizing Robinhood for how it had triggered and profited from the personal investment boom in January. 2021.
“In one fell swoop, a whole new generation of investors has been criticized and this commentary ignores the cultural change taking place in our nation today,” she said at the time.
Robinhood signed up millions of investors during the Covid-19 pandemic. Now it is struggling to keep them. The number of monthly active users on the platform fell 10% in March, compared with the same month a year earlier.
The company does not charge brokerage fees, relying instead on trading volume for revenue. It sends customer orders for high speed trading companies in exchange for cash, in practice known as payment to the command line.
Shares of Robinhood fell 2.8% to about $9.81 on Friday. Shares are down nearly 47% this year.
Mr. Buffett asked Munger if it was wise to make such public criticism, and Munger replied: “Probably not. But I couldn’t do otherwise.”
Akane Otani contributed to this article.
Write to Ginger Adams Otis at [email protected]
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