Berkshire Hathaway Vice President Charlie Munger on Saturday criticized Robinhood’s inventory trading app, saying the company “is falling apart. “
“It’s so simple to exaggerate a clever idea. . . Look at what happened to Robinhood from its peak to its lowest point. Wasn’t it obvious enough that something like this was going to happen?” said Munger saturday at Berkshire Hathaway’s annual shareholder meeting. .
Munger criticized what he called “short-term gambling, hidden commissions and bribes, etc. “of Robinhood.
Robinhood doesn’t rate users’ commission and generates most of its profits from “order payment,” which back-end payment agents get to direct consumer transactions to market makers.
“It’s disgusting,” Munger said. Now it’s falling apart. God becomes righteous. “
Robinhood went public in July and the stock is down 88% from its August 2021 peak.
The company gained prominence during the pandemic and played a key role in some big short-term cuts last year, as retail investors flocked to the app to increase inventory costs and inflict suffering on short-term traders betting against inventories.
Munger in February 2021, in the midst of a wild industry run, first criticized Robinhood for its practices and called the app’s business style “a dirty way to make money. “
The company on Thursday reported a reduction in the number of users and a larger-than-expected loss for the first quarter. Earlier in the week, Robinhood announced it would eliminate about nine full-time employees.
Robinhood responded to Munger’s comments and said the vice president perceived the trading platform.
“It’s annoying to see Mr. Munger misrepresent a platform and a visitor base he knows nothing about. Womb. . . He deserves to say what he means: unless you look like him, think and act like him, you can’t and deserve not to be an investor. We are satisfied with the percentage of our educational tools, because it also turns out that it is lost in virtual currencies,” Jacqueline Ortiz Ramsay, Robinhood’s public policy communications manager, said in an email to CNBC.
Munger’s comments echoed comments by Berkshire Chairman and CEO Warren Buffett earlier in the meeting, leaving Wall Street aside for turning the stock market into a “game room. “
“Is it sensible to criticize people?” Buffett asked.
“Probably not, but I can’t do it,” Munger said.
Watch the full CNBC Berkshire Hathaway annual meeting here.
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