#Robinhood trading free

It does this by attracting large numbers of users using incentives such as “free” stocks and commission-free trading, retaining those users and encouraging trading activity via behavioral triggers in the app, and earning razor-thin margins on those trades through a process known as payment for order flow (PFOF). Robinhood’s primary means of driving revenue is making very small amounts of money on individual trades at scale. Robinhood’s regulatory and legal challenges.Net interest revenue and Robinhood Gold.How Robinhood Makes Money: Robinhood’s Revenue Model And Cost Centers.

#Robinhood trading free

Pre-Robinhood: Rise of the free trading investment platform.

In this report, we explore Robinhood’s S-1, revenue and cost centers, competitive landscape, and areas of opportunity ahead of its IPO - as well as what the future might hold for the app that has almost singlehandedly transformed how online brokerages operate. Within Robinhood’s Q1’21 order revenue, options trading accounted for the largest share (38% of its total revenue), followed by stocks (26%) and cryptocurrencies (17%). The company captured $522M in revenue in the first quarter of 2021, quadruple the amount from Q1’20 - though net losses skyrocketed from $53M to $1.4B over the same period. Robinhood has been the subject of much attention over the past year, amid retail trading mania, a record $70M FINRA fine, continued congressional scrutiny, trading outages, and ramping customer service problems.Īt the same time, its recent S-1 filing also revealed that Robinhood turned a profit of $7.3M in 2020 amid heightened attention and an astronomically growing user base, up from a $107M net loss the previous year. Targeting a $40B valuation ahead of its IPO, Robinhood makes much of its revenue from razor-thin margins on vast volumes of individual trades - a business model that is as lucrative as it is potentially precarious. Today, it boasts more than 18M funded users, up from just 500K in 2015. Since it launched in 2013, Robinhood has become one of the most popular and influential fintech apps in the world.

Almost overnight, Robinhood gave millions of first-time investors easy access to the stock markets by making trading simple and, perhaps more importantly, free.