A Cautionary Tale: The Stock Market Frenzy
February 9, 2021 11:01 amLike many of you, we have been following the stock trade that has challenged Wall Street like never before: GameStop. While the shares of GameStop and other companies have since plummeted, there are many key lessons for PR and communications professionals.
Empowered by a Reddit forum of 3.5 million users and Robinhood, a financial services company headquartered in California, a group of retail traders succeeded in putting the squeeze on hedge funds by bidding up the price of GameStop shares. In response, Robinhood halted trading in certain shares, such as GameStop and AMC Entertainment Holdings, to ensure it complied with deposit regulations. (More details are available in their blog post.) While the decision has since been reversed, the branding nightmare still lives on.
Robinhood spent years building a brand image that promised an open and democratized American Financial System to all. After their controversial move, however, PR experts now say Robinhood has managed to demolish its brand equity and customer loyalty overnight.
Customers continue to flood Google Play Store and App Store with low ratings and angry one-star reviews. They also now face a class-action lawsuit. To regain consumer trust, Robinhood must develop open communication and transparency with their users. Brands are built on trust. Once broken, it can be difficult to rebuild it.
Robinhood has since reshaped their branding message to “We are all investors.” In the spirit of reconciliation, the new campaign will encompass their true message to their consumers: “We built Robinhood for the millions of people who have felt left behind by America’s financial system.”
Empowered by a Reddit forum of 3.5 million users and Robinhood, a financial services company headquartered in California, a group of retail traders succeeded in putting the squeeze on hedge funds by bidding up the price of GameStop shares. In response, Robinhood halted trading in certain shares, such as GameStop and AMC Entertainment Holdings, to ensure it complied with deposit regulations. (More details are available in their blog post.) While the decision has since been reversed, the branding nightmare still lives on.
Robinhood spent years building a brand image that promised an open and democratized American Financial System to all. After their controversial move, however, PR experts now say Robinhood has managed to demolish its brand equity and customer loyalty overnight.
Customers continue to flood Google Play Store and App Store with low ratings and angry one-star reviews. They also now face a class-action lawsuit. To regain consumer trust, Robinhood must develop open communication and transparency with their users. Brands are built on trust. Once broken, it can be difficult to rebuild it.
Robinhood has since reshaped their branding message to “We are all investors.” In the spirit of reconciliation, the new campaign will encompass their true message to their consumers: “We built Robinhood for the millions of people who have felt left behind by America’s financial system.”