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Robinhood just went public. Warren Buffett, Michael Burry, and other top investors have blasted the trading app and warned day traders to be careful.

Michael Burry.
Astrid Stawiarz/Getty Images
  • Robinhood joined the stock market at a $32 billion valuation on Thursday.
  • Warren Buffett, Michael Burry, and other top investors have blasted the trading app as reckless.
  • Market veterans have also warned day traders against rampant speculation and taking on debt.

Robinhood went public at a $32 billion valuation on Thursday, capitalizing on booming demand from retail investors seeking to trade stocks, cryptocurrencies, and other assets during the pandemic.

The trading app is popular among amateur investors and day traders because it doesn't charge commissions, allows fractional investing, and trusts its users to trade on margin and buy and sell risky, complex financial products such as options.

However, Warren Buffett, Michael Burry, and other leading investors have accused Robinhood and its peers of encouraging speculation and excessive risk-taking. Market veterans have also warned newbies not to borrow too much, trade things they don't understand, or treat investing like a game they're guaranteed to win.

A Robinhood spokesperson directed Insider to a recent letter from the company's cofounders ahead of the IPO.

"We're proud to serve this next generation of investors, and it's painful to see them continually lambasted in the news reports," Robinhood CEO Vlad Tenev and director Baiju Bhatt wrote. "Anecdotes of people winning (and losing) large amounts of money garner more attention than the more pedestrian truths - the majority of our customers prefer to buy and hold."

Here's what 10 top investors have said about Robinhood and the day-trading boom. Their quotes have been lightly edited and condensed for clarity:

Warren Buffett

Warren Buffett, the chairman and CEO of Berkshire Hathaway.
CNBC/YouTube

"There's nothing illegal about it, there's nothing immoral. But I don't think you build a society around people doing it. I hope we don't have more of it." — accusing Robinhood of encouraging users to trade options rather than invest for the long term. (May 2021)

Michael Burry

Michael Burry, the star of "The Big Short" and head of Scion Asset Management.
Jim Spellman/Getty Images

"If you do not use #robinhood, you have to see it to understand what #gamification of #stonks/options means. So here it is. If this looks like a serious investing app to you, and NOT a dangerous casino 'fun for all ages,' you've been #gamified." (February 2021)

 

Mark Cuban

Mark Cuban, the "Shark Tank" star and Dallas Mavericks owner.
Jin S. Lee/Business Insider

"It's not investing, and it's almost not even trading, it's more like revenge. It is the revenge of the nerd. It's the revenge of the little guy." — commenting on the horde of retail investors who sparked the meme-stock boom. (February 2021)

"If you're a day trader and you can walk and chew gum, you are making money right now. You're doing the same thing they did in the late '90s. You're rolling it. You think everybody is a genius in a bull market." (June 2020)

 

Read more: Wall Street legend Richard Dennis conducted an intellectual experiment that turned 23 novice investors into overnight millionaires. Here are the 6 trading rules and philosophies that his 'turtle traders' live by.

Chris Sacca

Chris Sacca, the founder of Lowercase Capital and an early investor in Uber, Twitter, and Instagram.
YouTube/Kevin Rose

"I have axes to grind against a lot of the guys you're wrecking, and I love to hear about real people stacking chips. But, please, from someone who has been there ... don't trade what you can't afford to lose." — advising the retail investors who executed short squeezes and hammered hedge funds to be careful. (January 2021)

"To the angry Robinhood bros who got into trading stocks this year: I was wrong. You're amazing. This has nothing to do with the market. It's all you and your mad skillz. Don't take profits off the table. Double down, on margin. Borrow everything you can. Stonks never go down!" — sarcastically responding to the backlash from day traders after he tweeted they got lucky and should cash out some of their profits. (January 2021)

Charlie Munger

Charlie Munger, Warren Buffett's business partner and Berkshire Hathaway's vice-chairman.
AP Photo/Nati Harnik

"Robinhood is beneath contempt. It's a gambling parlor masquerading as a respectable business. It's basically a sleazy, disreputable operation." (May 2021)

Leon Cooperman

Leon Cooperman, the former CEO of Omega Advisors, runs a family office now.
Jeff Zelevansky/Reuters

"They are just doing stupid things. This will end in tears." — commenting on retail traders buying shares in bankrupt companies and making other high-risk trades. (June 2020)

 

Read more: Robinhood gave a very sweet deal to investors like Ribbit Capital, NEA, and Index when they saved it from the GameStop meme-stock drama

Jim Chanos

Jim Chanos, the president and founder of Kynikos Associates.
David Orrell/CNBC/NBCU Photo Bank/NBCUniversal/Getty Images

"They are going to trade themselves into oblivion. We are at prices now where the crowd that is betting on margin and betting through options had better be right. Anything that corrects and reverts to the mean, or to real valuation metrics, is going to destroy a whole generation of investors." (November 2020)

Jeffrey Gundlach

"Bond King" Jeffrey Gundlach, the CEO of DoubleLine Capital.
CNBC/Getty Images

"There's been an incredible increase in tiny retail investor activity in terms of the accounts on Robinhood and other platforms that have just exploded in term of size. I think that's pretty dangerous. These people that are buying slices of the stock market don't even know what they're doing, and have probably lost money already." (June 2020)

"We'll have a tremendous unwind of a lot of the money that thinks the stock market is a one-way thing." (March 2021)

Howard Marks

Howard Marks, the cofounder and co-chairman of Oaktree Capital Management.
YouTube / Talks at Google

"Some people think it's a gambling game, like betting on football. It's not healthy to have people who are buying stocks for fun. It reminds me of the people who were day trading in 1999 and declaring day trading a 'can't miss' strategy. The tech stocks crapped out in 2000." (June 2020)