The link you provided says he sold his AMC on Jan 26, and the high price of AMC was 5.19. On the following day, the high price was 20.36, and the low was ~11. The price never fell back to the highest possible price he sold his shares for.
When a brokerage customer sells a share of a stock, the brokerage will not receive the proceeds for 3 business days, but if the customer has a margin account, they can buy a new stock immediately. If a customer buys a stock, the broker must send cash to a clearinghouse that day. If a customer makes 10 day trades in a day that each spend their entire account balance, the broker must come up with 10x the customer’s cash balance.
With the mania that was occurring throughout the stock market at the time, Robinhood was having to put up billions of dollars to the clearinghouse that far exceeded the value of securities that their customers had upon settlement.
There is no reason why stocks should take three days to settle. Robinhood was the victim of rules that are meant to protect big Wall Street banks from facing real competition.
Also, nearly every retail brokerage uses payment for order flow, but they just didn’t pass the savings from doing so onto their customers, they kept the money for themselves. Robinhood is engaging in the exact same practice as everyone else, but isn’t charging any commission to their customers. Further, PFOF results in the customer getting at least as good of a price as is available on a public exchange, but will sometimes receive a better price.
Robinhood literally makes trading available to the little guy. I would consider a RH wallet the same as Coinbase or any other major retail exchange.
