- 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."