Robinhood Data Breach Impacts Thousands | Twitter Outage Caps Off Rough Day

MarketBites Investment Newsletter for 10/16/2020

Quote of the Day
“Learn from the experiments history has already run and you can start the race halfway finished.”
– James Clear

Today’s Top Stories
  1. Robinhood hack impacts nearly 2,000 users: What happened?
  2. Twitter experiences widespread outages, claims there is no evidence of data breach.
What is driving markets today?

– U.S stocks pared losses as traders awaited news on stimulus negotiations. House Speaker Nancy Pelosi said that a Covid-19 relief package won’t wait until January. President Trump said that he would go over $1.8 trillion in stimulus – a move favored by Democrats. However, Senate Majority Leader Mitch McConnell quickly rejected the President’s proposal. For some reason, stocks continue to react to these back and forth negotiations. We continue to think that a deal won’t get done until after the Presidential election.

– Investors also digested data showing an unexpected surge in jobless claims to the highest since August.

– Governments around the world continue to grapple with how to devise targeted strategies that curb the spread of the virus, without resorting to the kind of broad national lockdowns that have decimated the economy.


Top Story 1: Robinhood Data Breach Impacts Thousands

What is Happening?
Robinhood is receiving major backlash for sub-par customer support along with a massive data breach leaving thousands out to dry. Should they be forced to change? Is this a risk investors take by using a low-price, zero-fee platform?

Why does this Matter?
Robinhood Markets has over 13 million users worldwide. Horror stories of compromised accounts have surfaced in recent days. In particular, Robinhood’s lack of an emergency hotline (or any phone number for that matter) has garnered intense criticism. Some users claimed to have noticed or had been notified of a breach for days before hearing back from Robinhood.

So far, Robinhood has attempted to address the issue by sending a push notification to their users, insisting they implement two-factor authentication for entry. However, some users claim this isn’t enough, and there are a handful of anecdotes claiming accounts have been compromised despite two-factor authentication.

What should Robinhood do? Surely consumers will leave given the app’s insecurity, but as seen here, leaving a brokerage can take weeks or even months depending on transfer fees or whether or not you want to sell your current holdings. For certain, it feels as if Robinhood has a responsibility to its users to provide live support in the event of a crisis.

The Takeaway:
Robinhood users have long been fed up with the lack of customer support from the brokerage. However, as the tales compile and data breaches become more complex, it appears the time has come for the firm to take action or lose users.


Top Story 2: Twitter Outage Caps Off Rough Day

What is Happening?
Twitter is capping off a tough week for them with another gaffe. For multiple hours Thursday, Twitter users were greeted with an error message as the app could not function. Twitter released a statement claiming an inadvertent change to its internal systems caused the error.

Why does this Matter?
Twitter, Facebook, and other tech-giants have been in the crosshairs of legislators and users this week. As the United States approaches election season and political tensions run high, the question of how social media platforms should react to new information and its validity is back in the public eye. With users already upset over censorship claims, a widespread outage compounds the harm to the firm.

Investors and executives alike have reason to be concerned should Twitter and other social media giants not clarify what their role is in the process of validating information. Legislator involvement would certainly not bode well for Alphabet, Twitter, Facebook, and others. In fact, Twitter CEO Jack Dorsey has already been subpoenaed by the Senate Judiciary Committee. The potential externalities of legislative involvement in the space may cause unforeseen headwinds in the space.

The Takeaway:
As seems to happen around every election cycle, legislators and users are honing in on tech-giants and the validity or fairness of the information they’re presenting to users. Especially with current senate involvement with Twitter’s CEO, this is a story to monitor for the sake of $TWTR and other stocks in the space.

What else is happening:
GM to unveil EV Hummer – (read here)
Amazon third-party sellers love Prime Day – (read here)
Business Insider buys a controlling interest in Morning Brew – (read here)
Pre-COVID plastics bets are backfiring – (read here)
Deals & IPOs:

– Array Technologies: The solar company’s shares surged over 65% on the first day of trading Thursday. The company was valued at $2.8 billion at IPO price   – (read here)

– Miniso: The Chinese discount retainer’s shares jumped nearly 25% on the first day of trading Thursday.   (read here)

 

Earnings Calendar for October 16th and 17th:
EARNINGS TODAY:
Citizens Financial Group ($CFG), Bank of New York Mellon ($BK), Ally Financial ($ALLY), State Street ($STT)
EARNINGS TOMORROW:
Enjoy your weekend!
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