Free stock trading app Robinhood, valued in July 2019 at over $US7.6 ($12) billion, underwent a major outage on Monday amid a major rally on the Dow Jones Industrial Average. Per TechCrunch, the error resulted in numerous users being locked out of their accounts and unable to trade using the service throughout the day.
“We started experiencing downtime issues across our platform this morning at market open,” a Robinhood spokesperson wrote to TechCrunch in an email. “We don’t have an estimate when the issue will be resolved but all of us at Robinhood are working as hard as we can to resume service.” According to CNBC, the service didn’t announce it had identified and was working on fixing the error until there was only an hour left in the trading day. As of around 9:30 p.m. ET on Monday evening, Robinhood’s status page listed most of its services as experiencing “major outage,” with email support at “degraded performance.”
We are still experiencing system-wide issues. Our team is continuing to work to resolve this and we’ll provide updates as they become available.
We apologize again for the trouble this has caused and appreciate your patience with us as we work to resume service.
— Robinhood Help (@AskRobinhood) March 2, 2020
While Robinhood was down, markets recovered from losses over the past week inflicted by fears of a slowdown as the novel coronavirus that originated in Hubei province, China continues to spread globally. Per the Wall Street Journal, gains were inspired in part by expectations the U.S. Federal Reserve and other central banks might lower interest rates to stimulate the economy. Monday’s gain of nearly 1,300 points on the Dow Jones Industrial Average was “the most ever in a single session,” CNBC reported.
As CNBC noted, trading platforms run by Fidelity and Charles Schwab also experienced issues last week amid an 800-point plunge in the same stock market index. Issues that plagued Robinhood on Monday, as well as those prior technical issues, may have been sparked by high volumes of trading as investors scrambled to keep up; according to TechCrunch, the company denied that the bug was a result of 2020 being a leap year. Whatever the reason, those on Robinhood (10 million, according to the company) may have thus lost out on the recovery after taking heavy losses.
Last year, Robinhood users discovered a glitch in a feature that allows them to “supercharge” their investing by padding it out with the company’s money; the bug allowed some users to borrow far more than should have otherwise been possible. Some users claimed to have raised six-figure positions from just a few thousand in funds. Previously to that, per TechCrunch, it signed up 850,000 people on a wait list for a no-fee checking and savings account plan that had to be killed after financial regulators said it would fall outside the protection of the Securities Investor Protection Corp.
Robinhood has also attracted negative attention from regulators in the past. The Financial Industry Regulatory Authority (FINRA) slapped it with a $US1.25 ($2) million fine in December 2019, saying it didn’t give users the best prices on trades from October 2016 to November 2017, but not disclosing how much those users missed out on.