Before Robinhood, anyone who wanted to invest in stocks would be charged between $5 to $10 a trade. They also needed to invest a minimum of $500 to open an account.
Vladimir Tenev and Baiju Bhatt (co-founders) had previous experience building these systems and saw the extraneous costs as little more than gatekeeping people out of investing.
“We are not setting any account minimums, which we think unlocks a market of investors who couldn’t do this before,” said Bhatt to CNBC at launch. “We see Robinhood as unlocking the microinvestor market.”
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Download nowRobinhood was popular even before launch. In 2014, 340,000 people had signed up to the app’s waitlist, by March 2015 (a month before it launched), that figure had doubled to 700,000. Fans from Europe, Australia and South America filled Robinhood’s forums, pleading for the app to launch in their country.
That dedication has remained, despite most of the stockbroking apps lowering minimum deposit and commissions, in some cases to zero, to entice younger users.
Even though Robinhood advertises itself as a “free” app, it still generates income through a process called payment for order flow. Essentially, when a person trades on the app, Robinhood sends that trade to a larger entity, which is able to leverage thousands of orders at once for a slight advantage. The larger entity then compensates Robinhood for the orders.
This process has received some criticism, especially after Robinhood halted trades of GameStop and BlackBerry stock. Investors accused Robinhood of bowing to pressure from the market makers who execute the larger trades. Payment-for-order-flow is also controversial as it incentivises Robinhood to find the highest bidder, not the leader who will execute the trade fastest. Robinhood generates around 70 percent of its revenue from the practice.
The company generates the other 30 percent of its income from account interest and Robinhood Gold, which lets users trade on margin, make larger deposits and access professional reports from Morningstar.
Robinhood seems unconcerned with growing internationally, it cancelled plans for the UK and Australia in 2020. Several free-trade accounts have emerged in both countries, Robinhood would also struggle to generate as much revenue as payment-for-order-flow is banned in the UK.
Robinhood added cryptocurrency trading in 2018, which includes all of the major currencies like Bitcoin, Ethereum, Dogecoin and Litecoin.
In January 2021, Robinhood was at the centre of Reddit’s /r/WallStreetBets battle against hedge funds. Thousands of activist investors bought GameStop stock, forcing a “short squeeze” on the hedge funds. Robinhood suspended trading of GameStop stock for a few days, which caused a wave of backlash against the startup, as the move was seen as appeasing Wall Street.
We’ve collected data and statistics on Robinhood. Read on below to find out more.
Robinhood key statistics
- Robinhood generated $1.81 billion revenue in 2021, a 90% year-on-year increase
- Robinhood had 15.9 million active users in 2022
- It added $3.4 billion to its balance sheet during the GameStop stock squeeze, after suspending trades for a week (TechCrunch)
Robinhood overview
| Title 1 | Title 2 |
|---|---|
| Launch date | 18 April 2013 |
| HQ | Menlo Park, California |
| People | Vladimir Tenev and Baiju Bhatt (co-CEO's) |
| Business type | Public (NASDAQ: HOOD) |
| Industry | Stockbroker and cryptocurrency |
Robinhood revenue
Robinhood made $1.81 billion revenue in 2021, primarily through options trading, although it also saw increases in crypto trading during the year.
Robinhood quarterly revenue 2020 to 2022 ($mm)
Robinhood annual revenue 2019 to 2021 ($bn)
| Year | Revenue ($bn) |
|---|---|
| 2019 | 0.27 |
| 2020 | 0.95 |
| 2021 | 1.81 |
Sources: Company data, Alphacution, CNBC
Robinhood profit
Robinhood made a small profit in 2020, but posted a net loss of $3.4 billion in 2021, its largest recorded annual loss.
Robinhood annual net income/loss 2019 to 2021 ($mm)
| Year | Revenue ($mm) |
|---|---|
| 2017 | -6.1 |
| 2018 | -57.5 |
| 2019 | -106.6 |
| 2020 | 7.4 |
| 2021 | -3686 |
Source: Company data
Robinhood assets under management
Robinhood had $98 billion in assets under management at the end of 2021, a $35 billion increase on the previous year.
Robinhood annual assets under management 2019 to 2021 ($mm)
| Year | Assets under management ($bn) |
|---|---|
| 2019 | 35 |
| 2020 | 63 |
| 2021 | 98 |
Source: Company data
Robinhood users
Over 15 million people use Robinhood as their primary trading platform. Activity has dropped on the platform since 2021.
Robinhood annual users 2015 to 2022 (mm)
| Year | Users (mm) |
|---|---|
| 2015 | 0.5 |
| 2016 | 1 |
| 2017 | 2 |
| 2018 | 6 |
| 2019 | 10 |
| 2020 | 13 |
| 2021 | 22.5 |
| 2022 | 15.9 |
Sources: Company data, Forbes, Fortune
Robinhood average account size vs competitors
Robinhood has a much smaller average account size in comparison to more established brokerages.
Average account size of brokerage apps 2021 ($)
| App | Average account size ($) |
|---|---|
| Robinhood | 4,000 |
| Hargraves Lansdown | 108,000 |
| E-Trade | 127,000 |
| Charles Schwab | 234,000 |
Source: BrokerChooser
Robinhood valuation
Robinhood’s valuation maxed at $20 billion in 2021, but has since taken a nosedive to $7.7 billion in 2022.
Robinhood valuation 2017 to 2022 ($bn)
| Year | Valuation ($bn) |
|---|---|
| 2017 | 1.3 |
| 2018 | 5.6 |
| 2019 | 7 |
| 2020 | 11.7 |
| 2021 | 20 |
| 2022 | 7.7 |
Sources: TechCrunch, CNBC, FT, Business Insider
Robinhood vs competitors: users
Want to learn more? Check out our stock trading & investment sector profile
Robinhood FAQ
How does Robinhood make money?
Robinhood makes most of its revenue through a process called payment-for-order-flow. Large entities, called market makers, execute hundreds of thousands of Robinhood trades at once and pay them for it.
Who owns Robinhood?
DST Global, Sequoia Capital, D1 Capital Partners, IVP, TSP Consumer Partners and Ribbit Capital have all lead investment rounds in Robinhood, although it is unclear how much each venture capital firms owns. Robinhood co-founders Vlad Tenev and Baiju Bhatt both maintain some ownership of the app, although until the IPO, we will not know how much.
What is Robinhood users average age?
Robinhood user average age is 31 (NYT), which is an increase of five years since the app launched in 2015 (WSJ)
What is Robinhood’s average revenue per customer?
Robinhood made an average of $64 for each customer in Q4 2021
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