This is an audio transcript of the FT News Briefing podcast episode: ‘Has meme-stock kid Robinhood grown up?’
Marc Filippino
Good morning from the Financial Times. Today is Friday, February 14th, and this is your FT News Briefing.
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Arm is causing a stir with a new chip project and Shein might have to pump the brakes on going public. Plus the online brokerage firm Robinhood finally has a feather in its cap.
Jennifer Hughes
So from what looked like a fintech start-up in 2021, it’s different now. It looks like it’s grown up.
Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.
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Arm will launch its own chip this year after securing Meta as one of its first customers. The move by the chip designer could upend the balance of a $700bn industry. I’m joined now by Tim Bradshaw, our global tech correspondent who helped break this story. Hi, Tim.
Tim Bradshaw
Hey, Marc.
Marc Filippino
All right, Tim. So can you remind us exactly what Arm does now and how the move into chip manufacturing will essentially change its business model?
Tim Bradshaw
So Arm is in many ways the most ubiquitous tech company that you’ve may never have really heard of because they operate behind the scenes. They make the blueprints, the designs that go into the chips that are made by companies like Apple and Nvidia and the iPhone or the GPUs that power AI. And they have always been kind of Switzerland in the tech industry. They have had to work with lots of companies that compete fiercely with each other. They had to kind of balance that very delicately. And they license their intellectual property to everybody. And moving into making their own chip brings them into competition with their own customers, who just happens to be some of the world’s most valuable companies.
Marc Filippino
Yeah. So what does it mean that companies like Meta are looking to buy chips from Arm?
Tim Bradshaw
So if we go back 20, 30 years, the number of companies that could design chips was pretty small. And since Apple showed the world what you could do when you design your own chips for your own products, basically every tech company with the resources to do it has started trying to design their own chips, too. And so we’ve seen Microsoft, Amazon, Google, especially, all move into designing their own chips, especially for the data centres, these huge server systems that are becoming ever more energy intensive as we move into the AI era. And so Arm’s designs are already ubiquitous in a lot of these data centres and it is now trying to help those companies that do not have the resources to develop their own chips by selling them a finished product. And Meta is the first customer that we have learned for this for Arm. But we expect there will be many more.
Marc Filippino
How could Arm’s announcement affect the AI and semiconductor industry more broadly.
Tim Bradshaw
By moving into territory that competes with its own customers. Could do one of two things. It could start to really supercharge its revenues because it’s suddenly selling a full chip rather than just getting a sliver of royalty for each one that sold. And it kind of goes from being a behind-the-scenes player in the chip industry to being one of the main actors, or it terrifies all of its Big Tech customers who have pretty deep pockets at this point. And they say, well, it’ll be hard to replicate Arm’s technology, but if they’re going to compete with us, well, we can make that investment. And they kind of risk scaring off all of those very big customers. So it’s pretty high stakes stuff, not just for Arm, but also for the kinds of investments that all of these Big Tech companies are going to be making in chips the next five or 10 years.
Marc Filippino
Tim Bradshaw is the FT’s global technology correspondent. Thanks so much Tim.
Tim Bradshaw
Thank you.
Marc Filippino
Arm share price jumped on yesterday’s news and ended the day up more than 6 per cent.
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Shein is thinking about putting its plans for an initial public offering on hold. There have been whispers that the Chinese fast fashion company plans to go public in the UK as soon as the end of April. But sources told the FT that US President Donald Trump’s crackdown on free imports might push that IPO back to later in the year. The repeal of de minimis rules would mean that shipments worth less than $800 would start getting hit with tariffs. That’s a huge deal for Shein, which sends a lot of those kinds of products to the US. The de minimis repeal is in pause mode right now, but sources say Shein is still concerned about the impact it could have on its IPO. Shein was valued at £66bn during its most recent funding round in 2023, and it could add a lot of shine to London’s somewhat lacklustre capital markets.
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It wasn’t that long ago that Robinhood was kind of considered a joke. The online broker and trading platform was the home of the 2021 meme stock craze. You guys remember GameStop? The point is that Robinhood was the place where amateur investors trolled the markets. But now Robinhood seems to be all grown up as the FT’s US markets editor, Jen Hughes, is here to tell me. Hey Jen.
Jennifer Hughes
Hey there.
Marc Filippino
So give me a quick sense of just how big of a turnaround we’ve seen from Robinhood. What’s its story?
Jennifer Hughes
Well, you put the first part of the story there already, the meme stock mania when people were stuck at home. It was the pandemic. Everyone had stimulus checks to spend and not much else to do. That was the peak for Robinhood back in the day. Then we had what I kind of called the wilderness years. It did its own IPO. It went public itself, but its shares absolutely tanked. They were down something like 80 per cent to the next year because people went back to work. Trading volumes dropped off and it kind of went away from people’s consciousness. But a lot has changed in the last year and it’s really riding high at the moment.
Marc Filippino
Yeah, it sounds like just a real rollercoaster ride. Give me a sense of how well it’s doing now.
Jennifer Hughes
Well, the shares are up more than 400 per cent in the last year. They’re well back past their IPO price above that now. It just announced blowout fourth quarter numbers at its first full calendar year of net profitability. So from what looked like a fintech start-up in 2021, it looks like it’s grown up.
Marc Filippino
What is behind all this newfound success? How did Robinhood do it?
Jennifer Hughes
Some of it is down to the market mood. We’ve had this sort of crypto trading period since the US election in November. This is a sense that the Trump administration is going to come out with a regulatory framework for crypto and then the whole market can go mainstream because it would be safer for mom-and-pop investors and for everyone to get into. But at the same time, Robinhood has been steadily building out new products. It did a credit card last year. More recently, they added futures trading. They now have this cool desktop product with serious charting capabilities. That’s for, like, the more active traders. So when people have looked at Robinhood, they’re looking again now like we are. It’s very different.
Marc Filippino
It’s for a more maybe mature investor or is it just got more mature products?
Jennifer Hughes
Yeah, a more mature investor. It won’t just be the millennials trading on it. It will also be perhaps mom and pop. But also those millennials are a couple of years older. They’re a little bit wealthier, and they’ve got a few more reasons to stick around. Now it’s trying to do other things, so it’s trying to offer retirement products, savings products. So it’s working towards being a one-stop shop for financial services. It’s got a huge way to go before it looks like a Fidelity or a Schwab or something of that size. But that’s kind of the pathway.
Marc Filippino
Yeah. I was actually going to ask you about that. Do you think that Robinhood’s success is sustainable or is this a blip?
Jennifer Hughes
That’s putting a reporter on the spot.
Marc Filippino
Sorry, Jen. (laughter)
Jennifer Hughes
(Laughter) But honestly, I have to say yes. Mostly it is sustainable. By that I mean that the longer-term trends are there in its favour. There really is this sort of new army of retail traders. Not everybody stopped when they went back to work after the pandemic. And what’s got a lot of the analysts excited this time is the idea that if we get this regulatory framework that everyone expects at some point around crypto, then the market in the US gets so much bigger. And if Robinhood can keep up with these guys and offer them more and more, it should grow.
Marc Filippino
Jen Hughes covers US financial markets for the FT. Thanks, Jen.
Jennifer Hughes
Thank you.
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Marc Filippino
Donald Trump brought the world one step closer to a global trade war yesterday. He ordered his advisers to come up with reciprocal tariffs to retaliate against countries that imposed taxes and levies on the US. The measures will happen on a country-by-country basis, according to a senior White House official. Up first are the ones that the US has the biggest trade deficits with, like China, the European Union and Mexico. The official also said the reciprocal tariffs could take effect in a matter of a few weeks or months.
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You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back next week for the latest business news. The FT News Briefing is produced by Sonja Hutson, Fiona Symon, Lulu Smyth, Ethan Plotkin,
Kasia Broussalian and me, Marc Filippino. Our engineer is Joseph Salcedo. We had help this week from Michela Tindera, Persis Love, Sam Giovinco, Breen Turner, David Da Silva, Michael Lello, Peter Barber and Gavin Kallmann. Our executive producer is Topher Forhecz. Cheryl Brumley is the FT’s global head of audio and our theme song is by Metaphor Music.