The GameStop Corp. website on a laptop and the Robinhood application on a smartphone.
Tiffany Hagler-Geard | Bloomberg | Getty Images
Robinhood, which has been at the center of the controversy after restricting trading in stocks like GameStop, is set to run its first Super Bowl ad.
The ad that the company is launching its largest branding campaign to date contains the message: “You don’t need to be an investor. You were born one.” The company said the ad for Sunday’s game is designed to highlight people of all backgrounds who are “investing time in themselves and the people and things they love,” whether they’re starting a business or changing their hair color.
The stock trading app faced a PR crisis as disgruntled customers hit back on restrictions placed last week on trading high volatility stocks.
A Robinhood user filed a class action lawsuit Thursday, and as of Friday afternoon, thousands of investors used an online service called DoNotPay.com to automatically join the lawsuit. The lawsuit alleged that Robinhood “purposefully and knowingly restricted trading in GameStop shares in the video game company in order to manipulate the market.” Robinhood lifted its trading restrictions on Tuesday and allowed customers to purchase up to 100 GameStop shares.
Robinhood has denied these claims, pointing to an increase in the Depository Trust & Clearing Corporation’s capital requirements as the retail industry invests in heavily shortened names like GameStop and AMC Entertainment.
“To put it in perspective, this week alone, our clearinghouse deposit requirements for stocks have increased tenfold. This has led us to put temporary restrictions on buying a small number of securities that clearinghouse had raised their deposit requirements on, “said the company in a blog post on Friday.
The app appears to be benefiting from this despite the turmoil: Robinhood led the industry by a wide margin in app downloads last week, according to JMP Securities analysis using SimilarWeb app data. The app was downloaded more than 600,000 times on Friday, compared to 140,000 on its best day in March during the 2020 pandemic. Robinhood raised an additional $ 3.4 billion from investors over the past two weeks to support record customer growth to support Monday.
The Super Bowl ad doesn’t make any reference to recent events. When asked how Robinhood wanted to address customer claims that the company had broken its “Democratizing Finance For All” branding mission and how the Super Bowl ad fits into Robinhood’s communications with customers, Christina Smedley, chief marketing officer, said that The company customers join see the app and want to know more about it.
“It was a great stage for us to remind people what we stand for and to remind people why the company was started in the first place,” she said.
The company worked with the MediaMonks agency and director Nina Meredith on the ad.
2020 was a huge year for retail investors. Major online brokers like Charles Schwab, TD Ameritrade, E-Trade, and Robinhood saw an increase in new accounts and trading activity. Smedley said the app is designed to reflect stories that customers have shared, whether they buy stocks when they’re running or have a second job.
“We created and designed this narrative about stories that customers told us,” she said. “We saw more people come to our platform over the course of 2020.” She said customers have accepted offers like the ability to buy broken stocks on Robinhood.
Robinhood wouldn’t comment on how the company intends to insure existing customers and rebuild trust, or how it will deal with any additional customer volume that a Super Bowl ad could bring, but rather point to recent blog posts from the company. Among them was a post on Tuesday about the two-day trade settlement period. The Post said the period “exposes investors and the industry to unnecessary risk and is ripe for change.”
Robinhood also posted a promoted post on Twitter this week that said, “We want to share what Robinhood believes in and what he stands for. Here’s the full story of our CEO Vlad” with a link to a comment from Vlad on USA Today Tenev. Many customers responded to the tweet with negative memes or screenshots of their problems.
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