Warren Buffett called the SPAC a “killer” and criticized the Robinhood stock trading app for promoting gambling during Berkshire Hathaway’s annual meeting in Los Angeles on Saturday.
Why it matters: Criticism from Buffet comes as SPAC or as special purpose acquisition companies, and Robinhood faces regulatory scrutiny after growing in popularity over the past year.
What are they saying: Buffett said during the event that SPACs “will not last forever, but there is money now, and Wall Street goes where the money is.”
- “SPAC has been around for a while, and if you get a name, you can sell almost anything,”
- Buffett’s longtime lieutenant Charlie Munger called the SPACs a “moral failure.” “It’s not just stupid, it’s embarrassing,” he added.
At Robinhood, Buffett said, “There’s nothing illegal, there’s nothing immoral, but I don’t think you’re building a society around the people who do it.” He said he “takes advantage of society’s gambling instincts and is not to be admired.”
- The 90-year-old investor said he was looking forward to reading the company’s public offerings.
- “It has become a very important part of the casino group that has joined the stock market in the last year or a year and a half,” Buffett said.
- Munger said it was “deeply wrong” and “divinely horrible that something like this would bring investment from civilized men and respectable citizens.”
The other side: ““There’s an old guard that doesn’t want the average American to have a seat on the Wall Street table so they can resort to insults,” Robinhood said in an email.
- “The future is more diverse, more educated and driven by engaging technologies that have the power to catch up. Opponents of this future and change are usually those who have enjoyed plenty of privileges in the past and who do not want those privileges to be violated.
- “Their criticism is unfortunate, but they prove why Robinhood’s mission is actually critical.
The new generation of investors is not a “casino group”. They break down old barriers to investment and control their financial future. Robinhood is on the right side of history. “