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Robinhood Markets Inc., or simply Robinhood, is a U.S.-based financial services company headquartered in Menlo Park, California.[2][3] The company offers the Robinhood smartphone mobile app, which allows individuals to invest in publicly traded companies and exchange-traded funds listed on U.S. stock exchanges without paying a commission.[4] The company makes money from interest earned on customers' cash balances and margin lending, and by selling order flow to high frequency trading firms.[5][6]

Robinhood Markets Inc.
Robinhood (company) logo.svg
Type of site
Financial Services
HeadquartersMenlo Park, California
Key peopleVladimir Tenev (co-founder)
Baiju Bhatt (co-founder)
IndustryFinance and Insurance
ServicesBrokerage firm
Websitewww.robinhood.com
Alexa rank2,820 (As of 13 March 2019)[1]
LaunchedApril 18, 2013; 5 years ago (2013-04-18)

As of its latest funding round, in March 2018, the company was valued at $5.6 billion.[7]

Robinhood operates a website and mobile apps for iPhone,[8] Apple Watch,[9] and Android.[10]

The company has no storefront offices and does not provide research reports or analytical tools on its platform.[5]

The firm is a FINRA-approved broker-dealer,[2] registered with the U.S. Securities and Exchange Commission and is a member of the Securities Investor Protection Corporation-- SIPC)--(SIPC has not been approved as of 1-1-2019).[11]

In September 2018, the company's co-founders announced plans to take the company public in 2019.[12][13]

The app has gone under scrutiny for establishing a checking account that offers high interest rates as it is not insured by the Federal Deposit Insurance Corporation.[14][15]

Bloomberg News reported in October 2018 that Robinhood receives almost half of its revenue from payment for order flow.[16] The company later confirmed this on its corporate website when asked by CNBC.[17]

HistoryEdit

The firm was founded by Vladimir Tenev and Baiju Bhatt who had previously built high-frequency trading platforms for financial institutions in New York City.[11][18]

In December 2013 Robinhood launched out of stealth on the crowdsourced technology news website Hacker News, leading to articles about the company in TechCrunch, PandoDaily, VentureBeat, TheStreet and others.[4][18][19][20] Initially the firm had a waiting list, and in under 30 days there were 100,000 signups.[21][self-published source?] In mid-to-late February 2014, co-founders Baiju Bhatt and Vladimir Tenev were on CNBC and Bloomberg TV.[22]

By September 2014, the waiting list had reached 500,000 people.[23] In March 2015, the company announced those still on the waitlist could create accounts and any U.S. residents, 18 and older, could apply for an account.[24]

As of January 2015, 80% of the firm's customers belonged to the demographic "millennials" (people between the ages 18 and 29) and the average customer age was 26.[25] Fifty percent of users who have made a trade use the app daily and 90% come back to the app weekly.[26]

As of February 2017, the company had executed over $30 billion in trades.[5] In April 2017, Robinhood raised $110 million at a $1.3 billion valuation led by Yuri Milner from DST Global,[27] and Greenoaks Capital and Thrive Capital, the venture capital firm founded by Josh Kushner, the brother of Jared Kushner (a senior adviser and son-in-law to U.S. President Donald Trump).[28]

In August 2017, the company began offering free stocks in exchange for referring new users.[29]

On January 25, 2018, the company announced a waitlist for commission-free cryptocurrency trading.[30][31][32] As of 9:00PM on January 25, 2018 the waitlist for enabling the feature grew to more than 1,250,000.[33] The month, Robinhood began offering commission-free trading of Bitcoin and Ethereum to users in California, Massachusetts, Missouri, and Montana.[34] In May 2018, Robinhood expanded its Crypto trading platform to Wisconsin and New Mexico.[35]

By February 2018, Robinhood had 3 million user accounts, around the same number as the online broker E-Trade.[36] By April 2018 Robinhood had raised a total of $176 million in venture capital funding, with the last valuation at around $6 billion, up from their previous evaluation of $1.3 billion.[37]

In June 2018, it was reported that the company was in talks to obtain a US banking license, with a spokesperson from the company claiming the company was in "constructive" talks with the U.S. OCC.[38] In December Robinhood announced checking and savings accounts, with debit cards in partnership with Sutton Bank, to be available in early 2019.[39] Robinhood initially claimed the accounts would be SIPC insured, which the SIPC denied.[40] The products were rebranded as "cash management" the next day.[41] In January 2019 the waitlist and sign up page were removed from the app.[42]

ReferencesEdit

  1. ^ "Alexa Internet: Robinhood.com". Alexa Internet.
  2. ^ a b Gannes, Liz (23 September 2014). "With $13 Million, Robinhood Aims to Share the Stock-Trade Wealth". Re/code. Re/code. Retrieved 26 September 2014.
  3. ^ "Robinhood lures digital coin traders from Coinbase with a free service". Digital Trends. 2018-02-22. Retrieved 2018-05-17.
  4. ^ a b Constine, Josh (December 18, 2013). "Robinhood App Will Offer Zero-Commission Stock Trades Thanks To $3M Seed From Index And A16Z". TechCrunch.
  5. ^ a b c MORRISSEY, JANET (February 18, 2017). "With No Frills and No Commissions, Robinhood App Takes On Big Brokerages". New York Times. (Subscription required (help)).
  6. ^ Kane, Logan. "Robinhood Is Making Millions Selling Out Their Millennial Customers To High-Frequency Traders". Seeking Alpha. Retrieved 13 February 2019.
  7. ^ Winkler, Rolfe; MacMillan, Douglas (March 15, 2018). "Valuation for Robinhood, Maker of App That Offers Free Stock Trades, Tops $5 Billion". The Wall Street Journal. (Subscription required (help)).
  8. ^ WOHLSEN, MARCUS (11 December 2014). "Stock Trading for the Touch-ID Era Has Finally Arrived". Wired.
  9. ^ Tweedie, Steven (24 April 2015). "Best new Apple Watch apps I should download first". Business Insider.
  10. ^ "Robinhood stock trading comes to web with finance news for its 3M users – TechCrunch". techcrunch.com. Retrieved 2018-05-02.
  11. ^ a b Touryalai, Halah (26 February 2014). "Forget $10 Trades, Meet Robinhood: New Brokerage Targets Millennials With Little Cash". Forbes Magazine. Retrieved 26 September 2014.
  12. ^ Constine, Josh. "Robinhood aims at IPO as the fintech startup seeks CFO". TechCrunch. Retrieved 11 January 2019.
  13. ^ Rooney, Kate (September 6, 2018). "Robinhood is on the path to IPO and is searching for a CFO". CNBC. Retrieved 11 January 2019.
  14. ^ Kauflin, Jeff (December 13, 2018). "In A Bold Asset Grab, Robinhood Offers 3% Interest On Checking And Savings Accounts". Forbes. Retrieved 11 January 2019.
  15. ^ Verhage, Julie (December 14, 2018). "Investing App Robinhood Is Facing 'Serious Concerns' Over Its New Checking Account With 3% Interest". Time Money. Retrieved 11 January 2019.
  16. ^ Foxman, Simone (October 16, 2018). "Robinhood Gets Almost Half Its Revenue in Controversial Bargain With High-Speed Traders". Bloomberg. Retrieved 18 January 2019.
  17. ^ "CNBC: How Robinhood Makes Money". CNBC. January 16, 2019. Retrieved 18 January 2019.
  18. ^ a b Carney, Michael (December 28, 2013). "Robinhood gets $3M to take from Wall St. and give to Main St. with its mobile-first, zero-commission brokerage". PandoDaily.
  19. ^ Matherson, Nate (December 17, 2013). "Robinhood Opens Investing Doors to Wall Street's 'Hood". TheStreet.com.
  20. ^ GRANT, REBECCA (December 28, 2013). "Robinhood's pitch to millennials: free stock trading". VentureBeat.com.
  21. ^ "Robinhood on Twitter". Twitter.
  22. ^ Navarro, Brian J. (February 27, 2014). "Robinhood, a new app, offers free stock trades". CNBC.
  23. ^ Wohlsen, Marcus (September 23, 2014). "New App Wants to Make Trading Stocks as Easy as Posting Selfies". Wired.
  24. ^ Roberts, Daniel (March 12, 2015). "Robinhood, an investing app, is luring stock-market newbies". Fortune.
  25. ^ Huang, Daniel (January 6, 2015). "Young, Poor and Looking to Invest? Robinhood Is the App for That". Wall Street Journal. (Subscription required (help)).
  26. ^ Constine, Josh (September 23, 2014). "Robinhood Raises $13M To Democratize Stock Market With Zero-Commission Trading App". TechCrunch. AOL.
  27. ^ McBride, Sarah (April 26, 2017). "Robinhood's Stock Trading App Is Valued at $1.3 Billion". Bloomberg News. (Subscription required (help)).
  28. ^ Irrera, Anna (April 26, 2017). "Trading startup Robinhood raises $110 million in new funding round". Reuters.
  29. ^ Constine, Josh (April 26, 2017). "Robinhood stock-trading app confirms $110M raise at $1.3B valuation". TechCrunch.
  30. ^ Cheng, Evelyn (25 January 2018). "Stock trading app Robinhood to launch bitcoin, ethereum trading in five states". CNBC. Retrieved 25 January 2018.
  31. ^ John Roberts, Jeff (25 January 2018). "Robinhood, the Investing App for Millennials, to Add Bitcoin and Other Cryptocurrencies". Fortune. Retrieved 25 January 2018.
  32. ^ Perlstein, Sharone (2018-03-19). "Robinhood, the Microfinance giant bets on Bitcoin". Sharone Perlstein. Retrieved 2018-03-19.
  33. ^ "Invest in Bitcoin & other cryptocurrencies, 24/7 & commission-free". Robinhood. 25 January 2018.
  34. ^ "Robinhood Opens Cryptocurrency Trading". Bloomberg.com. 2018-02-22. Retrieved 2018-04-11.
  35. ^ "Robinhood's Crypto Trading Platform Expands to Wisconsin and New Mexico | Finance Magnates". Finance Magnates | Financial and business news. 2018-05-07. Retrieved 2018-05-17.
  36. ^ Chafkin, Max; Verhage, Julie (2018-02-08). "Brokerage App Robinhood Thinks Bitcoin Belongs in Your Retirement Plan". Bloomberg Businessweek. Retrieved 2018-02-09.
  37. ^ https://www.bloomberg.com/news/articles/2018-05-11/robinhood-founders-turn-billionaires-in-a-silicon-valley-minute
  38. ^ "Robinhood in Talks With Regulators to Offer Bank Products". Bloomberg.com. Retrieved 2018-06-22.
  39. ^ Robinhood launches no-fee checking/savings with Mastercard & the most ATMs. TechCrunch. 13 December 2018.
  40. ^ Robinhood said to not be properly insured to offer checking & savings. TechCrunch. 14 December 2018.
  41. ^ A Letter From Our Founders. 14 December 2018.
  42. ^ Robinhood quietly stops users from signing up for cash accounts amid scrutiny from regulators. MarketWatch. 2 January 2019.

External linksEdit