• 2 hours How Climate Change Is Impacting Global Hunger
  • 5 hours Hacks, Bugs And Exploits: Growing Pains For The $4 Billion Blockchain
  • 7 hours Debunking The A.I. Productivity Myth
  • 23 hours Coca-Cola Hints At Cannabis Product
  • 1 day Saudi Wealth Fund Pumps $1B Into Tesla Rival
  • 1 day Major Financial Institutions Are Planning Crypto Products
  • 1 day Is A Market Meltdown Looming?
  • 2 days Is A Four-Day Workweek Feasible?
  • 2 days This Millennial Brokerage Is Coming To Tesla’s Rescue
  • 2 days $2.7 Billion In Assets To Be Auctioned Following Anti-Corruption Crackdown
  • 2 days Capital Churn, Avocado Toast And The Gold Standard
  • 3 days The New Ultra-Wealthy Benchmark Is $50 Million
  • 4 days Mastercard’s New Global Trade Hedge
  • 5 days Turkish Central Bank Finally Moves To Contain Inflation
  • 5 days U.S. Coal Exports At Risk As Hurricane Florence Nears
  • 5 days Universal Basic Income: Is This The Crypto End Game?
  • 6 days Poll: 80% Of Consumers Bullish On Bitcoin
  • 6 days UK Unicorn Eyes Flying Taxis By 2022
  • 6 days Zuckerberg Outlines Facebook's Plan To Combat 'Fake News'
  • 6 days Is Venezuela Privatizing Some Of Its Oil Fields?
Investing In The Final Frontier

Investing In The Final Frontier

A few savvy investors are…

Is This One Of The Most Exciting IPOs Of The Year?

Is This One Of The Most Exciting IPOs Of The Year?

London-based luxury fashion and technology…

Saudi King Overrules World’s Largest IPO

Saudi King Overrules World’s Largest IPO

Saudi Arabia’s King Salman has…

Michael Kern

Michael Kern

Safehaven

Michael Kern is a newswriter and editor at Safehaven.com, Oilprice.com, and a writer at Crypto Insider. Michael has several years of experience covering cryptocurrencies, and…

Contact Author

  1. Home
  2. Investing
  3. Other

Robinhood Changed Trading Forever, Now It’s Going Public

Robinhood

True to its name, Robinhood—the zero-fee trading app—is for the people, and loved by the people. It has successfully made stock trading accessible to absolutely anyone and everyone, and now it wants to go public. The only thing it’s missing is a CFO and a regulatory blessing.

For the novice trader or the would-be dabbler, nothing is better—or easier—than Robinhood. And while it’s not exactly stealing from the rich to give to the poor, it is leveling the playing field a bit.

As of this month, Robinhood is on the lookout for a CFO as it undergoes a series of audits by the SEC and FINRA, the Financial Industry Regulatory Authority. Once it passes regulatory compliance, the IPO can move forward.

No one thought they would get this far charging zero fees for trading when they launched in 2013. But the contrarians in the room were soon stifled. In fact, Robinhood didn’t just survive, it thrived.

In May, they even surpassed E-Trade in term of number of users. Now it has over 4 million users, while E-Trade had 3.7 million as of May.

That same month, Robinhood raised over $470 million in funding rounds, leading to a valuation of $5.6 billion.

Then, in February, Robinhood started offering cryptocurrency trading services. Six months later, there are as many as 5 million users trading crypto through the app.

Now, according to Bloomberg via Cointelegraph, it’s even in talks with the U.S. Office of the Comptroller of the Currency for a banking license.

So with a $5.6-billion valuation for a free trading app, how does Robinhood make its money?

That’s easy: It’s not all free. If you’re not a novice and you want margin trading, Robinhood Gold has a starting cost of $6 per month. Like a bank, it also collects interest on the cash and stocks in customer accounts. Related: China’s Richest Man Leaves Alibaba

When Robinhood went crypto in February, that sparked speculation that it might ICO rather than IPO—but that speculation has now been put to rest. An IPO will give Robinhood mainstream legitimacy, and that’s what it’s always been about.

This IPO should garner a lot of investor interest. The positives are lining up, especially compared to trading-app rivals. Keep in mind that not only did Robinhood surpass E-Trade in May in terms of number of users, but it also did it with a skeleton crew: E-Trade has some 4,000 employees to pay, while Robinhood has only around 250.

So, that’s three revenue streams, soaring user numbers—especially since they launched crypto-trading—and a nice, low overhead.

The bold leap by Robinhood’s founders to change the way trading is done is working, too. It certainly ups the ante for trading houses. In fact, JPMorgan Chase felt compelled to create its own zero-fee trading platform last month, instead of charging almost $25 per trade.

Thus, Robinhood stays true to its name, and still manages to fascinate investors.

So what’s next? Ahead of an IPO, Robinhood has just added 250 global stocks to its portfolio. In the words of Robinhood co-founder Vlad Tenev, speaking to CNBC, one remaining missing link was lack of exposure to stocks outside the U.S. “We looked at what customers were searching for and not getting.”

"Our strategy has always been listen to the customer and work on building new products to make their lives easier," Tenev said.

By Michael Kern for Safehaven.com

More Top Reads From Safehaven.com

Back to homepage

Leave a comment

Leave a comment