Robinhood (company)

Robinhood Markets Inc.
Headquarters Menlo Park, California
Key people Vladimir Tenev (co-founder)
Baiju Bhatt (co-founder)
Industry Finance and Insurance
Services Brokerage firm
Website www.robinhood.com
Alexa rank Increase 5,128 (August 2018)[1]
Launched April 18, 2013 in Palo Alto, California

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.[5]

After an April 2017 fundraising, Robinhood had a $1.3 billion valuation.[6] The Wall Street Journal reported in 2018 that the company had closed another round of financing that valued the company at $5.6 billion.[7]

History

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.[8][9] Tenev and Bhatt realized that high-frequency traders and electronic trading firms pay effectively nothing to execute trades. This inspired Tenev and Bhatt to bring existing technology to the retail brokerage market with Robinhood, a commission free stock brokerage.[10] As of March 2016, it had nearly one million customers.[11]

As of August 9, 2017, the company began offering free stocks in exchange for referring new users.[12]

As of early 2018, Robinhood had 3 million user accounts and this is approximately the same number as the online broker E-Trade.[13]

On June 22, 2018, it was reported that Robinhood were in talks to obtain a US banking license, with a spokesperson from the company claiming they were in "constructive" talks with the U.S. OCC.[14][15]

Current operations

Robinhood operates a mobile app that allows customers to buy and sell stocks on U.S. exchanges commission-free and started offering free access to extended market trading from August 2018. The app is available for iPhone,[16] Apple Watch,[17] and Android.[18]

Robinhood is available on mobile and on web.[19]

To keep costs down, 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).[8]

Robinhood Gold is a premium margin account which increases buying power for a subscription paid monthly based on tiers.

Product launch

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][9][20][21] Initially the firm had a waiting list, and in under 30 days there were 100,000 signups.[22] In mid-to-late February 2014, co-founders Baiju Bhatt and Vladimir Tenev were on CNBC and Bloomberg TV.[23][24]

By September 2014, the waiting list had reached 500,000 people.[25] 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.[26]

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.[27] Fifty percent of users who have made a trade use the app daily and 90% come back to the app weekly.[28]

As of 2017, the company had executed over $30 billion in trades.[5]

On January 25, 2018, the company announced a waitlist for commission free cryptocurrency trading. Immediately, users who enable the feature are able to track the price of Bitcoin, Ethereum, Ripple and 13 other cryptocurrencies.[29][30][31] As of 9:00PM on January 25, 2018 the waitlist for enabling the feature grew to more than 1,250,000.[32]

On February 22, Robinhood began offering commission-free trading of Bitcoin and Ethereum to users in California, Massachusetts, Missouri, and Montana.[33] In May 2018, Robinhood expanded its Crypto trading platform to Wisconsin and New Mexico.[34]

Funding

Robinhood has raised a total of $176 million in venture capital funding.[35]

Robinhood received $3 million in seed capital from investors including Google Ventures, Andreessen Horowitz, Index Ventures, IT Ventures, Social Leverage, and Elefund.[36]

Robinhood raised an additional $13 million in Series A funding in September 2014.[28] Jan Hammer of Index Ventures led the round and joined the Robinhood board.[28] Also joining the round were Ribbit Capital; Howard Lindzon, co-founder of StockTwits and general partner at Social Leverage; Aaron Levie, founder of Box; Dave Morin, founder of Path; Jared Leto; Snoop Dogg; and Nas of QueensBridge Venture Partners.[28]

Robinhood raised an additional $50 million in Series B funding in May 2015, led by New Enterprise Associates (NEA). Existing investors Index Ventures, Ribbit Capital and Social Leverage joined the round, along with new investor Vaizra Investments. As part of the financing, NEA General Partner Kittu Kolluri joined the Board of Directors.[37]

In April 2017, Robinhood announced they raised $110 million at a $1.3 billion valuation led by Yuri Milner from DST Global[6], 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. [38]

Questions regarding SEC filings have lead some to accuse Robinhood of selling user data to High-Frequency Traders (HFTs) and concealing this income stream via unusual reporting standards. This would allow front running of the trades by the HFTs. [39]

See also

References

  1. ↑ "robinhood.com Traffic Statistics". Alexa Internet. Retrieved 15 August 2018.
  2. 1 2 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. 1 2 Constine, Josh (December 18, 2013). "Robinhood App Will Offer Zero-Commission Stock Trades Thanks To $3M Seed From Index And A16Z". TechCrunch.
  5. 1 2 3 MORRISSEY, JANET (February 18, 2017). "With No Frills and No Commissions, Robinhood App Takes On Big Brokerages". New York Times.
  6. 1 2 "Robinhood's Stock Trading App Is Valued at $1.3 Billion". 26 April 2017. Retrieved 6 April 2018 – via www.bloomberg.com.
  7. ↑ Winkler, Rolfe; MacMillan, Douglas (15 March 2018). "Valuation for Robinhood, Maker of App That Offers Free Stock Trades, Tops $5 Billion". Retrieved 6 April 2018 – via www.wsj.com.
  8. 1 2 Touryalai, Halah (26 February 2014). "Forget $10 Trades, Meet Robinhood: New Brokerage Targets Millennials With Little Cash". Forbes Magazine. Retrieved 26 September 2014.
  9. 1 2 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.com.
  10. ↑ "Robinhood: A Zero Commission Stock Brokerage". Bloomberg L.P. February 20, 2014.
  11. ↑ "Discount brokerages: Free trade: Share-trading joins the list of ostensibly free online services". The Economist. March 10, 2016. Retrieved 12 March 2016.
  12. ↑ "Robinhood stock-trading app confirms $110M raise at $1.3B valuation – TechCrunch". techcrunch.com. Retrieved 2018-04-06.
  13. ↑ Chafkin, Max; Verhage, Julie (2018-02-08). "Brokerage App Robinhood Thinks Bitcoin Belongs in Your Retirement Plan". Bloomberg Businessweek. Retrieved 2018-02-09.
  14. ↑ "Bloomberg: Crypto, Fiat Trading App Robinhood 'in Talks' to Obtain US Banking Licence". Cointelegraph. 2018-06-21. Retrieved 2018-06-22.
  15. ↑ "Robinhood in Talks With Regulators to Offer Bank Products". Bloomberg.com. Retrieved 2018-06-22.
  16. ↑ WOHLSEN, MARCUS (11 December 2014). "Stock Trading for the Touch-ID Era Has Finally Arrived". Wired.
  17. ↑ Steven Tweedie (24 April 2015). "Best new Apple Watch apps I should download first". Business Insider.
  18. ↑ "Robinhood: At a Play Store near you". Under the Hood.
  19. ↑ "Robinhood stock trading comes to web with finance news for its 3M users – TechCrunch". techcrunch.com. Retrieved 2018-05-02.
  20. ↑ Matherson, Nate (December 17, 2013). "Robinhood Opens Investing Doors to Wall Street's 'Hood". TheStreet.com.
  21. ↑ GRANT, REBECCA (December 28, 2013). "Robinhood's pitch to millennials: free stock trading". VentureBeat.com.
  22. ↑ "Robinhood on Twitter". Twitter.
  23. ↑ Navarro, Brian J. (February 27, 2014). "Robinhood, a new app, offers free stock trades". CNBC.
  24. ↑ "Robinhood: A Zero Commission Stock Brokerage". Bloomberg TV. February 20, 2014.
  25. ↑ Wohlsen, Marcus (23 September 2014). "New App Wants to Make Trading Stocks as Easy as Posting Selfies". Wired.
  26. ↑ Daniel Roberts (12 March 2015). "Robinhood, an investing app, is luring stock-market newbies". Fortune Magazine.
  27. ↑ Huang, Daniel (January 6, 2015). "Young, Poor and Looking to Invest? Robinhood Is the App for That". Wall Street Journal.
  28. 1 2 3 4 Constine, Josh (23 September 2014). "Robinhood Raises $13M To Democratize Stock Market With Zero-Commission Trading App". TechCrunch. AOL.
  29. ↑ Cheng, Evelyn (25 January 2018). "Stock trading app Robinhood to launch bitcoin, ethereum trading in five states". CNBC. Retrieved 25 January 2018.
  30. ↑ John Roberts, Jeff (25 January 2018). "Robinhood, the Investing App for Millennials, to Add Bitcoin and Other Cryptocurrencies". Fortune. Retrieved 25 January 2018.
  31. ↑ Perlstein, Sharone (2018-03-19). "Robinhood, the Microfinance giant bets on Bitcoin". Sharone Perlstein. Retrieved 2018-03-19.
  32. ↑ "Invest in Bitcoin & other cryptocurrencies, 24/7 & commission-free". Robinhood. 25 January 2018.
  33. ↑ "Robinhood Opens Cryptocurrency Trading". Bloomberg.com. 2018-02-22. Retrieved 2018-04-11.
  34. ↑ "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.
  35. ↑ "Robinhood - Crunchbase". Crunchbase. Retrieved 6 April 2018.
  36. ↑ "Robinhood - Crunchbase". Crunchbase. Retrieved 6 April 2018.
  37. ↑ "Onward". Robinhood. May 7, 2015.
  38. ↑ https://www.reuters.com/article/us-robinhood-investment/trading-startup-robinhood-raises-110-million-in-new-funding-round-idUSKBN17S1WV
  39. ↑ https://seekingalpha.com/article/4205379-robinhood-making-millions-selling-millennial-customers-high-frequency-traders
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