Robinhood Faces Another Outage After Tesla, Apple Split Stocks

Robinhood and TD Ameritrade both experienced outages right as the market opened on the last day of August. Both platforms struggled to meet the demand for Apple and Tesla post stock splits.

August 31, 2020 | AtoZ Markets – The Robinhood online brokerage app has gained a dedicated following among investors who like its commission-free stock trading and well-designed user interface. But in recent months, Robinhood has suffered recurring tech issues that have, at times, prevented investors from accessing their accounts or executing trades.

Robinhood & TD Ameritrade experienced another outage

According to DownDetector, complaints about trade execution on Robinhood started spiking ahead of the 9:30 a.m. ET open of stock trading this morning. Robinhood’s status page was displaying notices that order execution was seeing degraded performance. Both sources listed continuing issues through noon.

The Robinhood app and webpage remained accessible throughout the morning, although multiple Robinhood users were noting on Twitter their inability to execute trades.

Robinhood tweeted the following to its users at 12:11 p.m. ET to acknowledge the problems and inform them that they had been resolved:

Nevertheless, DownDetector continues to report elevated levels of complaints about the Robinhood platform as of writing.

Meanwhile, there were no reported problems at TD Ameritrade as of 11:53 AM ET, according to website Downdetector. Downdetector indicated 3,215 problems reported at 9:31 AM ET for TD Ameritrade, with 79% of those problems related to log-in, according to Downdetector.

Why did the Robinhood app go down?

The latest Robinhood outage comes as two significant trading events occupy markets this morning: The Dow Jones Industrial Average rebalancing, and stock splits by Apple, Inc. and Tesla, Inc.

Read also: Elon Musk Confirms Tesla Was Targeted By Indicted Russian Hacker

Apple announced on July 30 that its board had approved a 4-for-1 stock split. Meanwhile, Tesla announced a 5-for-1 stock split on August 11. Both stock splits were effective as of the open of trading this morning, which has driven very strong trading volume in both stocks.

At the same time, the DJIA is rebalancing the stocks that comprise the 30-company index of leading U.S. firms. This is the first shake-up in the index since the S&P Dow Jones Indices substituted Walgreens Boots Alliance for General Electric (GE) in 2018.

Robinhood’s history of outages

If you’re a longtime Robinhood user, then you probably know this isn’t the first time the platform has experienced issues.

In March, Robinhood saw three outages in a single week. The first outage, on March 2, lasted for nearly 17 hours while stocks were surging higher in the wake of the late February coronavirus crash. The second and third March outages were much shorter, but they certainly added salt into the injury of traders who already missed out on an entire day of trading.

According to statements made by the company at that time, the March outages were the result of “stress on the app’s infrastructure,” a high volume in trading due to market volatility, and a record number of sign-ups.

On June 3, there was a brief outage that lasted about 20 minutes, according to the company. According to comments on DownDetector at that time, users were experiencing frozen trade options and the app saying it was unable to execute orders.

According to DownDetector, Robinhood has experienced outages every month, except for August and December 2019, since July 2019. DownDetector reported five or more outages in the months of October 2019, and March, April and May 2020. It detected a total of 21 outages in March 2020.

Robinhood isn’t the only online trading platform that has experienced outages. Morgan Stanley, one of the world’s biggest wealth managers, saw its online trading platform go down for a few hours in March due to a bug in software from a third-party vendor, as reported by CNBC. The bank guided investors to call and place trades with human advisers, rather than do so online on their own.

Robinhood clients vent frustration

Some Robinhood users have come to see service outages like the one this morning as the norm.

Robinhood is a giant in the fintech space. The private company is worth $8.3 billion, making it one of the 10 most valuable venture-backed fintechs in the U.S. But recently, Robinhood has struggled to retain a foothold among other trailblazers in the industry.

Moreover, data from analytics firm App Annie indicates that monthly active users have slowed considerably on the platform, growing just 13% year-over-year in 2019 compared to nearly doubling year-over-year in 2018.

What should you do during outages?

Online brokers like Robinhood rely on a smoothly functioning technology back-end to facilitate your trades. But when technology hits a snag, you lose the ability to buy and sell securities. It’s an undeniably frustrating experience that elicits anger and can undermine your confidence and trust in your online brokerage firm.

Unfortunately, there isn’t much you can do once a trading platform like Robinhood goes down. Your best strategy is to simply wait it out.

“There is not much you can do,” says Nick Holeman, CFP, head of financial planning at Betterment. “If you can’t log in, you can’t log in. That said, as a CFP, there are plenty of lessons for investors to learn and takeaway from this.”

Keep in mind, trading platforms protect the funds in an investor’s account, so individuals shouldn’t panic at the thought that their money is going to go missing.

“SIPC insurance and FINRA regulations help ensure your money is protected,” Holeman says. “Being unable to log in is still unnerving, but knowing these safeguards are in place can help you breathe easier.”

There are more than a few commission-free trading platforms available, and if you don’t like the service you’re getting from one online brokerage, you can always use frequent system outages as an opportunity to research the advantages of other platforms.

Think we missed something? Let us know in the comment section below.


Leave a Reply

Your email address will not be published. Required fields are marked *