Okay folks, so this is going to be an extremely violent week and let's just say it's time that we prepare. There's one stock in particular that is going to be the most talked about, the most watched, and definitely the most controversial this week. and we need to talk about what it is and my thoughts on it and what to prepare for. And the only thing that I ask in return is that you hit that ravishing like button and also don't forget to subscribe either.

Okay, so first recaps and prep. So market finished off very, very strong last week with the S P up the dow up the Nasdaq up a decent recovery from earlier in the week, the Lucid merger vote went through, although a day late, which means that Monday the merger should be completed and Lucid should be trading under ticker symbol Lcid. Very interesting to see if Lucid follows the traditional pattern of perhaps having a little bit of a jump post merger and then selling off as the hype dies down. I see the long-term argument for Lucid as much, much more compelling.

I think that a lot of the value of Lucid is going to be acknowledged once the cars start going out. Right now, people are still thinking that Lucid is a very, very speculative, hyped up no number company. But once they actually start rolling cars off the lot, we're going to have real numbers and we're going to have real proof of concept. Now in terms of earnings reports, this is a huge damn week.

Monday's big player is Tesla reporting. After close, I'm looking for revenue expectations. Looking for confirmation that demand increased. Rumors are true.

Looking for updates on supply chain and production capacity? With the chip shortage? blah blah blah blah. you know the spiel. We also have Apple and Microsoft on Tuesday also looking for chip shortage and manufacturing updates. Wednesday.

Boeing and Ford also manufacturing updates I need. We have some severe software companies reported on the same day like Facebook, and less or so Paypal, Spotify and Shopify. Thursday We have Amazon, Pinterest, Twilio, and Upwork Friday. We have Exxon and Chevron representing the oil space.

This is going to be quite the dramatic week, so I'm looking forward to working through it with all of you. Hopefully we'll get some good catalyst plays as well and we'll keep you updated in the briefings as well as the post market updates on the channel. Okay, so let's go ahead and start now. Whether you like it or not, the most popular stock and most talked about stock this week is going to be Robinhood.

Yes, Robin the Hood is going public via ipo this week under ticker symbol hood and this is going to be happening most likely on Thursday. Now look folks, I understand to probably the majority of our viewers that investing in Robin Hood is sort of like investing in a satanic rear end warmer. And I myself have been incredibly critical of Robinhood over the years, criticizing their executions, their handling of several crises, and just the overall watered-down experience on the platform. But I've also acknowledged the huge role they've had in terms of developing the retail trading space and bringing so many new people into the niche.

They basically forced trading costs down for everybody and removed tons of barriers to entry that new traders today didn't even know existed five years ago. It's fixed tons of problems and of course it's introduced tons more, but at the same time hey, it's had a huge impact whether we like it or not. In fact, more than 50 percent of Robin Hood's customers are first-time investors. Robinhood features 18 million funded accounts, 17.7 million monthly active users, and Robin Had, while being one of the most controversial retail brokers, routinely gets more and more retail traders to flock to it, and even a lot of people who on social media bash Robinhood.

they still at the same time use Robinhood. Why? Because their platform appeals to the average investor, and the fact of the matter is that for the new trader, Robinhood's platform is about the easiest to get into and the most exciting. Something that's watered down actually provides a lot lower of a barrier to entry. Now, I personally am a huge believer that the retail trading industry is going to continue to grow over the next 10 to 20 years.

I do not believe the media narrative that retail money is just in the market right now because it's easy and people just want to make fast dough on stupid speculation. I think that people are starting to actually learn how the market works and they're trying to get power back for themselves. and I think that Robin Hood has a damn good shot to realize and wake up to the fact that hey, retail, it's time to double down on retail traders and give them the freedom and power in this market. My opinion is that a lot of retail brokers are on the verge of realizing that by backing retail, they're going to make a lot more money than by backing Wall Street.

Whether we like it or not, Robinhood is one of the best place brokers right now to actually pivot to providing retail traders with that strength in this market to continue to prevail and make the market a more fair playing field. The fact of the matter is that the consistent growth of the retail trading industry was led by Robin Hood. Robin Hood, for all of its faults, has been the trend setter. And if you need any more proof, look at all the other platforms that popped up after Robin Hood and the ones that popped up before Robin Hood that all pivoted to similar business models.

Post Robin Hood a few short years ago, it was common practice for retail traders to have to pay five to ten dollars per trade for commission. It was common practice where retail trading platforms didn't try to market to you because they knew they'd have you just by offering traits. Robin had created the race to zero with zero commissions. Robin had started the whole free stock promotion thing.

Trading platforms are trying to actually deliver for the retail trader instead of just throwing random things at you and expecting you to just deal with 1990s interfaces. Again, I would argue that Robinhood went a little bit too far in terms of watering down their platforms, but they instigated this whole rise of mobile platform trading. It is very, very difficult to ignore them as a trendsetter, but things I don't like? Well, number one: the valuation. Robin Hood is introducing itself at a valuation of about 35 billion.

This is a valuation that they're getting away with specifically because they're coming off of such insane growth numbers. We had the biggest boom in retail trading ever in 2020 and then in the first two months of 2021. It was even more insane than that. But these growth numbers come and go with market euphoria which also comes and goes.

So while the retail trading industry had the biggest boom in 2020 in early 2021, and it looks like Robinhood's having this exponential growth, the fact of the matter is that we don't know exactly how long this boom is going to last. This is an industry that has boom and bust cycles, and with that, you have to realize that hey, Robinhood needs to have a little bit more of a realistic growth projection, because if we start seeing quarter after quarter after quarter or we're having lower numbers, that doesn't necessarily dictate that Robin Hood is going to die until it goes to zero users. It just means that retail trading as an industry is cooling down for a little while. The second thing I don't like about Robinhood is really the regulatory worries.

There's been a lot of questions in terms of the crucial pieces of Robinhood's business model. A lot of people argue that hey, Robinhood is kind of gamifying trading, and of course, a lot of people just join Robin Hood and don't actually understand what they're trading. And it's led regulators to question whether or not something should be done to put more restrictions on what Robinhood can and can't offer clients. But many still argue that Robin Hood is not really an investing app.

It's just a gambling app disguised as an investing app. What? If Regulators decide to step in and stop the very same edge that Robin Hood has on the market. For me personally, I say let the individual choose. Why is it that regulators have to go in and protect you from making your own choices? Oh no, you could choose something bad.

Hey, I could choose to jump off that balcony tomorrow if I wanted. Regulators can't stop me. People need to have some personal responsibility to say hey, if I'm gonna go on a platform, it's up to me to decide what I do and what I don't do. Number three is controversial practices.

Robin Hood is a payment for order flow broker, and when you send an order, the order goes to a wholesaler who then provides you with the shares instead of the platform Send in the order directly to the exchange. Now in Robinhood's case, they receive what's called payment for order flow, which means they get a kickback, which has allowed them an extra revenue stream to actually allow for zero commissions in the first place. Back in October 2019, we talked about how all of these brokers that were now trying to compete with Robinhood like Td, Ameritrade, Fidelity, Charles Schwab. Well, with lowering their commissions down to zero, they were going to have to make up for the revenue somehow.

And as a result of retail traders demanding zero commissions, many of them have moved to actually making up for it in the order flow, which means going through wholesalers. Now the criticism of wholesaling is that hey, well, wholesalers actually can participate against retail traders in the broader market. And wholesaling for retail traders who they're also fighting against in many situations, creates this really weird incentive structure where wholesalers have privileged information which they can use to bet against retail traders. And most of the popular retail trading platforms either get paid throughout you to market makers or they just do it for free.

For example, of course, Robin Hood, who is a payment for order flow broker routes your orders through a market maker and get paid for it, whereas Fidelity, for example, routes your orders to market makers. but they don't receive a kickback for it, but both are still routing you through market makers. 53 of Fidelity's market orders were routed through Citadel in their last report, for example. But unlike Fidelity, Robinhood doesn't actually allow you to opt out of this.

I think that Robinhood could fix this problem by just allowing their customers the ability to say hey, okay, well, I don't want to be routed through market makers, I want to be routed directly to the exchange, And if the customer wants to be routed to the exchange, well, hey, they have to understand that Maybe you're going to get slower execution. Maybe you're going to have to pay something in terms of a commission. Maybe you're going to have to have some other liquidity drawback. I believe that customers should have the option of deciding where to route their orders to, and they should be made aware of the consequences of routing in one direction or the other.

Both Robinhood and Fidelity, for example, have a very successful system where if retail traders want their shares to be lent out to, for example, short sellers, they have the option to opt in or out of that. By allowing that choice, Retail traders have the individual freedom to decide whether or not it's a good fit for them, and that situation also needs to go in terms of executing via exchange or via wholesaler, perhaps even choosing which wholesaler Because not all wholesalers are created equal. some of them are literally active war mongers against retail traders, and hey, look, I'm willing to acknowledge that a lot of the problem here is just the regulatory environment. The process of wholesaling is fine, and studies actually show that almost always it results in better price execution.

But we also have to make sure that if you want to be a wholesaler, you can't also play against the people that you're wholesaling for. And I acknowledge that I'm a hypocrite because I used to payment for order flow brokers, but because I prefer their platforms and their execution is better for me and my trading style. I've stuck with them and I've tested other brokers and I've tried rerouting and it just it doesn't provide the same results for me. And it makes sense.

Wholesaling allows brokers to make more money, offer more competitive platforms, and also allows more liquidity in those liquidity pools because you're going to a wholesaler instead of going to a more illiquid exchange. I just think that for one, Robin Hood needs to allow the ability to opt out of that. If users want to opt out of that and number two on a regulation level, we need to make sure that wholesalers are being more transparent and they're not able to manipulate things for their favor. And they're not able to actively bet against the interests of the people they're wholesaling with.

It's fine to make a little money off the spread. I don't have a problem with that, but when you're talking in some cases active manipulation, it's a huge problem and that needs to be stopped. I don't dislike the wholesaling system, I just dislike the transparency and the regulation of the wholesaling system. That being said, for better or worse, I personally believe that Robinhood is going to continue to be one of the leaders in terms of trend setting, and I believe the retail trading niche is going to continue to grow.

I also think that Robinhood is going to have a lot of opportunities to win the trust of retail back and in order for me to consider to buy, I'd have to see it cool off. Post ipo ipos are when all the hype comes in, so once that cools off and people stop talking about it, hey, that's when you're gonna start seeing better pricing. But I also need to see Robinhood taking real action to emphasize the fact that retail traders are their business model. They need to be able to, as they promise democratize retail trading.

and that means making it more fair. And that means allowing more freedom for retail traders to decide what's best for them in terms of where their orders are being routed, in terms of making sure they handle a lot of these crises better, and in my opinion, making sure that their platform is a lot more reliable for executing orders, even in some of these really bad tense situations. I also think that they need to hold market makers that they transact with to a much higher standard, because if you're going to be a market maker for a massive, massive audience base the retail trader, then you have to make sure that you're holding yourself to a higher standard and retail traders are worth it because it's a massive damn market. If Robin Hood can do all of these things well, I would start taking them a lot more seriously and I think that there's a chance that they do.

But we'll wait and see. Anyways, folks that caps off the video. If you have any questions, feel free to reach out to us below or join us on Ziptrader Circle if you'd like to learn how to trade. with our step-by-step lessons, our private chat, and of course our daily morning briefings where we brief on all the catalyst each and every morning.

all of our favorite catalysts. Well, I'll go ahead and put a link to Ziptraderu below. We do have a new coupon code down there called Fudstopper50 the spelling's down below, but it's not as good as the last coupon code, but it should do the trick if you're interested in joining us or learning more. Anyways, have a great day and I'll see you in the next video.