| Hey guys, Annie here. An online horde used the stock-trading app Robinhood to put a hole through the Wall Street establishment last week. When Robinhood Markets Inc. temporarily impeded their efforts, it sparked an outcry and sent the company scrambling for cash. The startup raised emergency funds from investors and reinstated trading in a limited way. The episode shows the benefits of being a private company with a small pool of wealthy shareholders to rely on. With a possible initial public offering near, the GameStop affair is also putting Robinhood under a starker light. The company has been blazing a path to the public markets that was widely expected to reach its destination this year. The question that will inevitably be on the minds of prospective investors: What happens when the amateur-trader masses come for Robinhood's stock? Founded in 2013, Robinhood helped turn trading into a form of entertainment. It showed an entire generation that buying stock could be as easy as ordering a sandwich on DoorDash and that it could be fun, too. TikTok, Twitch and YouTube are full of people sharing tips on trading fractional shares and options contracts. People have plenty of other online brokers to choose from: Charles Schwab, Fidelity Investments, E*Trade. But none has captured the imagination of millennial investors and Extremely Online individuals quite like Robinhood. Last year, the app had about 13 million users, and that was before my mom was calling me to find out what a short squeeze is. For those who are still perplexed, like Dionne Warwick ("What are stonks and why is it a trending subject?"), that's what friends are for. Here's the (very) short version: A band of traders from a Reddit forum called WallStreetBets bid up the price of unloved companies that hedge funds liked to bet against, most notably GameStop. Shares of the beleaguered video game reseller went from less than $19 at the end of last year to more than $347 on Wednesday. This blistering rally carried major ripple effects, bringing at least one hedge fund to its knees. Behind the scenes, it also put serious strain on the machinery underpinning the financial system—and on Robinhood itself. Robinhood had to rush to come up with $1 billion on Thursday after its clearinghouse demanded more collateral in one of the wild trading sessions. The decision to slam the brakes on purchases of GameStop, AMC Entertainment Holdings Inc. and other internet-viral stocks drew rebukes from David Portnoy, founder of Barstool Sports, and two people in Congress who never seem to agree on anything: Democratic Representative Alexandria Ocasio-Cortez of New York and Republican Senator Ted Cruz of Texas. They join a growing number of skeptics and watchdogs that have been circling the company. In December, Robinhood agreed to pay $65 million to settle allegations that it failed to properly inform clients about a crucial aspect of how it earns money, the extent of which was first reported by Bloomberg. (Robinhood neither admitted nor denied wrongdoing.) It now faces a probe in Massachusetts, where financial regulators called out its "gamification" of trading. This idea that Robinhood coaxes people into potentially precarious financial situations has been a chief criticism of the company for years. That could very well end up being the lasting result of the Reddit-fueled nostalgia stock bubble. But the last week uncovered a different hazard of Robinhood's so-called "democratization of finance." It's that professional investors can get burned, too—at the hands of Redditors who hatched their plans out in the open, no less. —Annie Massa | 
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