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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.

Go deeper

America rebalances its post-Trump news diet

Illustration: Annelise Capossela/Axios

Nearly halfway through President Biden's first 100 days, data shows that Americans are learning to wean themselves off of news — and especially politics.

Why it matters: The departure of former President Trump's once-ubiquitous presence in the news cycle has reoriented the country's attention.

2021 sees a record number of bills targeting trans youth

Illustration: Annelise Capossela/Axios

Republicans in at least 25 states have introduced over 60 bills targeting transgender children — a legislative boom since January that has beaten 2020's total number of anti-trans bills.

Why it matters: LGBTQ advocates say the unprecedented push was catalyzed by backlash to Biden's election and the Supreme Court ruling that workers cannot be fired for being gay or transgender.

Why migrants are fleeing their homes for the U.S.

Illustration: Eniola Odetunde/Axios Photo: Herika Martinez /Getty Images 

Natural disasters in Central America, economic devastation, gang wars, political oppression, and a new administration are all driving the sharp rise in U.S.-Mexico border crossings — a budding crisis for President Biden.

Why it matters: Migration flows are complex and quickly politicized. Biden's policies are likely sending signals that are encouraging the surge — but that's only a small reason it's happening.