- Robinhood — the popular commission-free stock trading app founded by Vlad Tenev and Baiju Prafulkumar Bhatt — has announced that it now has over 10 million users
Robinhood — the popular commission-free stock trading app founded by Vlad Tenev and Baiju Prafulkumar Bhatt — has announced that there are now more than 10 million users on the platform. Now other brokerages are dropping their commission fees.
“We believe participation is power. We founded this company to break down barriers to our financial system. To do that, we spent our earliest days holding customer research sessions, so we could better understand how to serve a new generation of investors,” said Robinhood in the company in its announcement about the milestone. “Rooted in this customer focus, we pioneered commission-free stock and ETF trading with no account minimums. And since then, we’ve added commission-free options trading, commission-free crypto trading through Robinhood Crypto, our premium offering Robinhood Gold, the Robinhood Snacks newsletter and podcast, and soon, a competitive interest rate on uninvested cash through your brokerage account.”
Robinhood launched six years ago and the user base has doubled from what it was one year ago. The company was at about 6 million users as of January 2019.
As a comparison, TD Ameritrade has 11 million client accounts and E*TRADE has 4.9 million brokerage accounts. Charles Schwab and TD Ameritrade announced that they would be merging in a $26 billion deal and they will be serving 24 million clients combined.
Going forward, Robinhood said that it will continue to listen in order to expand to more services that pass value back to its users while challenging the industry in the process.
Robinhood raised nearly $1 billion in venture capital since it was founded and now the company is valued at $7.6 billion. This is up from a $2 billion valuation as of last year.
Robinhood is especially popular with millennials and about half of the company’s users are first-time investors. The founders of Robinhood were inspired by the 2008 financial crisis to enable people who were frustrated by the way the stock trading system was set up.
One of the hiccups that Robinhood had to deal with was the ability for traders to borrow an unlimited amount of money to purchase stocks using “infinite leverage.” Some of those traders shared their tactics on Reddit forum “WallStreetBets.”
Robinhood started to restrict those accounts and then a permanent update was issued to block it from happening again. And Robinhood spokesperson Jack Randall told Forbes that the company has protections to make sure that there is enough cash or stock when a customer places an options order.
“Robinhood monitors closely for any type of abusive activity on our platform and will take action as appropriate, including but not limited to restricting customer accounts,” Randall explained.
Former Amazon executive Jason Warnick was hired last year as Robinhood CFO. And former WhatsApp general counsel Anne Hoge was brought in as chief legal officer last month.
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