Robinhood CEO endorses real-time settlement

CNBC's Kate Rooney reports on the latest response from Robinhood after last week's Reddit-fueled market volatility. She also reports on their biggest ad campaign yet. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi

Robinhood, which has found itself in the center of controversy after restricting trading on equities including GameStop, will run its first Super Bowl ad.

The ad, which will kick off what the company says is its largest ever brand campaign, features the message: “You don’t need to become an investor. You were born one.” The company said the ad for Sunday’s game is meant to highlight people of all backgrounds investing “time in themselves and in the people and things that they love,” whether it’s starting businesses or changing their hair color.

The stock trading app has faced a public relations crisis as angry customers hit back at restrictions imposed last week on trading of some high volatility stocks.

A Robinhood user filed a class-action lawsuit Thursday, and by Friday afternoon, thousands of investors were using an online service called DoNotPay.com to automatically join the suit. The suit alleged that Robinhood limited the trading of video game retailer GameStop shares “purposefully and knowingly to manipulate the market.” Robinhood on Tuesday rolled back more of its trading limitations, allowing clients to buy up to 100 shares of GameStop.

Robinhood has denied those claims, and pointed to an increase in capital requirements from the Depository Trust & Clearing Corporation due to the retail investing frenzy in heavily shorted names like GameStop and AMC Entertainment.

“To put it in perspective, this week alone, our clearinghouse-mandated deposit requirements related to equities increased ten-fold. And that’s what led us to put temporary buying restrictions in place on a small number of securities that the clearinghouses had raised their deposit requirements on,” the company said in a blog post Friday.

The app seems to be benefiting despite the uproar: Robinhood led the industry in app downloads last week by a wide margin, according to JMP Securities’ analysis using SimilarWeb app data. The app saw more than 600,000 downloads on Friday, compared with 140,000 on its best day in March during the pandemic market rout in 2020. Robinhood also raised another $3.4 billion from investors in the past two weeks to support its record customer growth, the company said Monday.

The Super Bowl spot doesn’t reference the recent events. Asked how Robinhood planned to address customer claims that the company had broken its brand mission “to democratize finance for all” and how the Super Bowl ad fits into how Robinhood is communicating with customers, chief marketing officer Christina Smedley said the company is seeing customers joining the app and wanting to know more about it.

“It felt like this was a great stage for us to remind people about what we stand for and remind people about why the company was put into existence in the first place,” she said.

The company worked with agency MediaMonks and director Nina Meredith on the ad.

2020 was a huge year for retail investing, with major online brokers including Charles Schwab, TD Ameritrade, E-Trade and Robinhood seeing new accounts and trading activity surge. Smedley said the app is meant to reflect stories that customers have shared, whether it’s buying shares when they’re on a run or working a second job.

“We sort of created and crafted that narrative around stories that customers have told us,” she said. “We saw, throughout the whole of 2020, more people coming onto our platform.” She said customers have embraced offerings like the ability to buy fractional shares on Robinhood.

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