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Robinhood app fails again as Wall Street tumbles

Robinhood claims to have 10mln US customers and is preparing to launch a UK app this year

AJ Bell - Robinhood app fails as Wall Street tumbles

Robinhood, the US startup that is meant to provide commission-free share trading, left investors unable to trade during a frantic period after Wall Street opened on Monday.

With stocks collapsing around the world, the richly valued Silicon Valley company’s platform failed for the second time in the month, with users unable to sell their plunging investments or to buy any bargains they saw.

READ: S&P's 7% fall triggers circuit breaker

“Trading is currently down on Robinhood and we’re investigating the issue,” Robinhood said, just after Monday’s opening bell.

“We are experiencing issues with equities, options and crypto trading.”

Although trading had been "partly restored" by 10.30am and fully restored half a hour later, these collapses followed a similar outage a week ago, when US stocks had been surging.

“Our team has spent the last two days evaluating and addressing this issue,” the company's founders said in a blog post last week.

“We worked as quickly as possible to restore service, but it took us a while. Too long. We now understand 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.”

However, such explanations have not been good enough for some customers, who have threatened to sue the company for losses and filed a class-action lawsuit in a Florida court last week.

Robinhood, which was itself valued at more than US$7.6bn in its latest funding round, claims to have 10mln US customers and is preparing to launch a UK app this year.

UK registrations opened in November, promising British investors the ability to buy and sell over 3,500 overseas stocks without execution fees.

The platform’s cut-rate offer triggered a price war in the US and has seen traditional banks and brokers also offer low or no-commission trading. 

But with more prominent stumbles such as seen this month, it would seem like traditional UK stock brokers and share trading platforms like Hargreaves Lansdown, AJ Bell and Interactive Investor do not have too much to worry about for now.    

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