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Illustration: Sarah Grillo/Axios

Millions of stock and options traders were effectively shut out of the market for all of Monday as well as two hours of early trade on Tuesday.

Driving the news: The culprit was Robinhood, a fast-growing stock-trading platform that inexplicably face-planted on a day when trading volume surged and the stock market rose by 4%.

Why it matters: Robinhood was valued during its last fundraising round in July at $7.6 billion, based on the thesis that bringing Silicon Valley's disruptive norms to Wall Street would help the company capture an audience of fast-twitch millennials. This week's news is a reminder of why old-fashioned trustworthiness has its merits.

The big picture: Robinhood's unbeatable price of $0 for stock trades ultimately prompted all its major competitors to follow suit. That, in turn, begat mega-mergers: Morgan Stanley is buying E-Trade, while Charles Schwab is buying TD Ameritrade.

Be smart: Now that giants like Fidelity and Vanguard Group have massive scale and $0 trades, it's hard to see where Robinhood's comparative advantage lies. The 7-year-old startup risks finding itself racing to the bottom, signing up mainly options traders who don't qualify for margin accounts anywhere else.

Flashback: Robinhood is known for overreaching. At the end of 2018, it announced a checking account and was then forced to ignominiously unannounce it. In 2019, users found a glitch that gave them "infinite leverage," and Robinhood was also fined $1.25 million for not giving its users the best prices on stocks.

  • The outage this week is Robinhood's worst blunder yet, and only serves to reinforce the impression that the brokerage is not robust enough to stand up to the giants in the space.

What they're saying: Robinhood is blaming "instability in a part of our infrastructure that allows our systems to communicate with each other" for the outages on both Monday and Tuesday. The company is saying that service is now "fully restored."

The bottom line: Wall Street is built on trust. It's hard to see why any of Robinhood's customers should trust it at this point.

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Illustration: Sarah Grillo/Axios

Don't be surprised if COVID metrics plunge over the next few days, only to spike next week.

Why it matters: The COVID Tracking Project warns of a "double-weekend pattern" on Thanksgiving — where the usual weekend backlog of data is tacked on to a holiday.

Trump pardons Michael Flynn

President Trump with Michael Flynn in 2016. Photo: David Hume Kennerly/Getty Images

President Trump on Wednesday pardoned his former national security adviser Michael Flynn, who pleaded guilty in the Mueller investigation to lying to FBI agents about his conversations with a former Russian ambassador.

Why it matters: It is the first of multiple pardons expected in the coming weeks, as Axios scooped Tuesday night.