INSUBCONTINENT EXCLUSIVE:
It wasn''t the leap year, a coding blip, or a hack that caused Robinhood massive outages yesterday and today that left customers unable to
Instead, the co-CEOs
write that the cause of the outage was stress on our infrastructure — which struggled with unprecedented load
That in turn led to a thundering herd& effect — triggering a failure of our DNS system.
Robinhood was offline from Monday at 6:30am
Pacific to 11pm Pacific, then had another outage this morning from 6:30am Pacific until just before 9am Pacific.
The $912 million-funded
fintech giant will provide compensation to all customers of its Robinhood Gold premium subscription for borrowing money to trade plus access
to Morningstar research reports, Nasdaq data, and bigger instant deposits
It offering them three months of service.
A month of Robinhood Gold costs $5 plus 5% yearly interest on borrowing above $1,000, charged
Before a pricing change, the flat fee per month could range as high as $200
However, compensated users will only get the $5 off per month, for a total of $15
That could seem woefully insufficient if Robinhood users missed out on buying back into stocks like Apple that went up over 9% on Monday
Robinhood is calling it a &first step&.
Impacted Robinhood users can contact the company here to ask for compensation
Below you can see the email Robinhood sent to custoemrs late last night.
Robinhood email to customers late last night
Robinhood is also
working to contact impacted customers on a individual basis, and it looking into other forms of compensation on a case by case basis,
company spokesperson Jack Randall tells me
It unclear if that might include cash to offset what traders might have lost by having their money locked in inaccessible Robinhood accounts
during the outage.
Compensation could become a significant cost if the startup assesses that many of its 10 million users were impacted
The markets gained a record $1.1 trillion yesterday, but some Robinhood traders may not have been able to buy back in as the rebound
occurred following mass selloffs due to fears of coronavirus.
Down again, Robinhood will offer ‘case-by-case& compensation for its outage
on the day markets gained $1.1 trillion
Now the startup, valued at $7.6 billion, will have to try to regain users& trust
When it comes to your money, we know how important it is for you to have answers
The outages you have experienced over the last two days are not acceptable and we want to share an update on the current situation .
We worked as quickly as possible to restore service, but it took us a while
Too long& wrote co-founders and co-CEO Baiju Bhatt and Vlad Tenev [disclosure: who I know from college].
As for exactly what triggered the
downtime, the founders write that Multiple factors contributed to the unprecedented load that ultimately led to the outages
The factors included, among others, highly volatile and historic market conditions; record volume; and record account sign-ups.& There been
a frenzy of retail trading activity in the wake of coronavirus
There also been sudden spikes in stocks like Tesla amidst mainstream media attention.
Going forward, Robinhood promises to work to improve
the resilience of our infrastructure to meet the heightened load we have been experiencing
We&re simultaneously working to reduce the interdependencies in our overall infrastructure
We&re also investing in additional redundancies in our infrastructure.& However, they warn that we may experience additional brief outages,
but we&re now better positioned to more quickly resolve them.
The outage comes at a vulnerable time for Robinhood as oldschool brokerages
like Charles Schwab, Ameritrade, and Etrade all recently moved to eliminate per-trade fees to match Robinhood pioneering zero-comission
Though some of those brokerages experienced infrastructure troubles recently, Robinhood massive outages could push users towards those
incumbents that they might perceive as more stable.
