Robinhood customers could only sit by and watch as the DJIA posted its biggest one-day point increase in history on March 2. Many of those customers are new to trading since the brokerage launched to the public in late 2014, and found themselves unable to log in, trade, or access their accounts as markets surged for the first day following a week-long sell-off that plunged markets into a correction.
Robinhood customers were sent an email around 4:30 PM Eastern time that the system was "experiencing downtime" affecting functionality that had started at 9:33 AM ET. The markets had been closed more than four hours when the platform finally came back online around 8:30 PM ET.
Robinhood did not provide an explanation for the outage until late in the day on March 3, when the co-founders published a blog post saying that their systems just could not handle the "unprecedented load."
The mobile apps and the website crashed again on the morning of March 3, 2020, just as the Federal Reserve announced interest rate cuts. This time, Robinhood support acknowledged the outage within a half-hour of its start rather than waiting most of the day as they had on March 2.
Twitter was flooded with frustrated Robinhood customers trying to get to their accounts and take advantage of the huge upward market swing. Several posted screenshots of their options positions that had had enormous gains during the day that they wanted to close, but were unable to access. The frustration was palpable.
In response to a complaint from a Robinhood user, others posted incentive links to Webull and the dough app, or talked up their personal favorites. Robinhood posted two tweets, one in the morning saying, "We are aware of the issue and are working to have all systems up and running as soon as we can. We’re so sorry this is happening!" The second came just after the market closed, saying, "We apologize again for the trouble this has caused and appreciate your patience with us as we work to resume service."
Around 2:30 AM Eastern on March 3, Robinhood sent an email to customers with the subject line, "Status Update: Robinhood is currently back online," which stated, "On Monday, March 2, at 9:33 AM ET, we had instability in a part of our infrastructure that allows our systems to communicate with each other. This resulted in outages across many of our services, preventing customers from using our app, website, and help center." The email did not address the many rumors but assured customers that their funds were safe and their privacy had not been compromised.
Customers with options expiring on March 2 were particularly incensed at the outage. Robinhood said that expiring long options contracts that were at least $0.01 in the money were exercised, and short contracts were likely assigned. The email went on to explain that Robinhood's support team is experiencing high volume and "cannot respond within our usual response time." The email closed with an apology for the inability to contact Robinhood support during the outage, and a pledge to respond to queries "as soon as we can."
Many Robinhood customers hollering for legal action or compensation on social media will be disappointed to learn that their agreement with the brokerage releases the firm from liability due to "the use or the inability to use the content or the service." The paragraph containing this bit of legalese appears in all caps on the second page of the document.
DownDetector also attracted Robinhood customers who were upset that they could not log in. The comments from users were also salty. DownDetector's outage chart on March 2 show the number of outage reports by the minute for Robinhood.
March 3rd's Downdetector chart shows the complaints coming in regarding that day's outage.
The tweets on March 3 responding to the second major outage in two days included outrage about the $75 transfer fee Robinhood charges when a customer transfers their account to another broker. Most brokers who receive a transferred account will reimburse those fees upon request, but you'll need $75 in cash in your Robinhood account to initiate the transfer in the first place.
The blog post acknowledging the outages said that the Robinhood team is working "to improve the resilience of our infrastructure to meet the heightened load we have been experiencing." The firm plans to build in additional redundancies in its infrastructure, but warns, "As our engineering team works to upgrade our infrastructure, we may experience additional brief outages." Robinhood customers should plan accordingly.
It wasn't smooth sailing for all other online brokers during the massive surges in trading of the last seven volatile market days, either. Fidelity customers had problems loading options chains for about half an hour last week, and there were complaints about other brokers having slow service or a lack of quotes as they switched on more capacity. None of those issues lasted more than a few minutes, and trades went through.
There are few brokers that are designed to handle more than a small fraction of their customer base logging on simultaneously, but most have stress plans in place to help them ramp up capacity when they need it.
The following brokers have stated that their systems had no downtime during the trading surges that began February 24: Interactive Brokers, tastyworks, TradeStation, and Lightspeed. There are others that may not have been affected without stating so publicly.