Like several other app industries, stock trading and investment saw a huge spike in usage during the coronavirus pandemic. Millions of people stuck at home were able to take advantage of new zero-commission mobile apps to trade shares, indexes and options.
Robinhood led the way with zero-commission in the US and has been the lead platform used by those investing in the “meme stocks”, like GameStop and AMC Entertainment. This pattern of investment was followed in other apps, which led to several platforms banning the trading of these stocks.
Larger investment platforms, such as Charles Schwab and E-Trade in the US, have both lowered commissions to better compete with Robinhood. Other features, like fractional shares and interest on balance, have also been added.
In the UK and Europe, several startups such as Trade Republic and Freetrade are attempting to become the European Robinhood, while older platforms like eToro and Plus 500 have lowered their fees to better compete.
Almost all of these zero-commission platforms use a process called payment-for-order-flow (PFOF) to generate income. The process bundles thousands of trades and directs them to a market maker, which will then compensate the stockbroker for it.
This process is controversial, as it was pioneered by Bernie Madoff, responsible for the largest Ponzi scheme in history. However, Robinhood and other operators have said the process allows zero-commission stock trading apps to exist.
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In the UK, the process has been banned. Freetrade and other platforms generate most of their income through foreign exchange and premium subscription services. The European Union and US FTC are both looking into PFOF legality.
We are specifically focused on commission-free stock trading, which was pioneered by Robinhood and is now available through a myriad of platforms. As most stockbrokers in the US and some in the UK have removed commission fees (which were $7 a trade pre-Robinhood), we have tried to properly account for all of the value generated on these apps as well.
As most platforms generate a considerable amount of their app revenue through payment-for-order-flow, we have used this metric to collect financial data in the US and EU, alongside other financial data. For the UK, we have used other metrics, as payment for order flow it banned.
To learn more about the stock trading app market sector, read on below.
Top Stock Trading Apps
|Robinhood||By far the most popular stock trading app by users, even though total assets are far lower than incumbents like Fidelity and Charles Schwab|
|Cash App||Square added zero-commission stock trading to Cash App in 2020, which is part of the company’s aim to become a financial “super app”|
|eToro||This stock trading app differentiates itself through the use of social copy features, which let newbies copy experienced traders portfolios|
|Revolut||Another finance app which is dedicated to the vision of the “super app”, Revolut recently rolled out zero-commission trading in the US|
|WeBull||A Chinese-backed stock trading app, which has made waves in the US with 13 million registered users and two million monthly actives|
|Plus500||Israeli-based stockbroker which deals primarily on contracts for difference (CFD), although it has recently added other instruments|
|Trading 212||One of the more popular zero-commission stock trading apps in the UK, with 1.2 million active users|
|Freetrade||Launched in 2018, Freetrade is one of the newer additions to the ecosystem. Borrowing heavily off Robinhood, it also offers an ISA|
|Trade Republic||Quickly becoming the most popular stock trading app in Europe, Trade Republic was recently valued at $5.3 billion|
Stock Trading App Revenue
This chart only tracks stock trading revenue, which is derived from trade execution and the various fees stockbrokers attach to it. Savings funds, wealth management and other financial services connected to the stock trading platform are not included.
Stock Trading App Revenue by App
As with the previous chart, values are from stock trading revenue and fees attached to it. For this reason, Robinhood is much closer in revenue to stockbrokers like Charles Schwab and TD Ameritrade than it would be if all of their collective revenue was included.
Stock Trading App Users
The number of retail investors using mobile apps has steadily increased, with a surge in 2020 due to the coronavirus pandemic and the rise of meme stocks. Users are expected to increase to over 150 million in 2021.
Stock Trading App Users by App
Side-by-side comparisons of each app is difficult, as some stockbrokers record all users, while others only include active customers. Also, most Charles Schwab and TD Ameritrade customers do not use the company’s mobile apps.
Stock Trading App Users in US
The US has one of the highest rates of adoption for stock trading, with over 50 percent of the population owning stocks. The proliferation of zero-commission stock trading apps has also enticed a new generation into stock trading at a younger age.
Stock Trading App Users in Europe
In Europe, the percentage of people who have invested in stocks in far lower, with Estonia the only country with over 50 percent involvement. In most countries, 15 to 35 percent of households have invested in stocks.
Stock Trading App Valuations
We have decided to add the valuations of all companies which receive the majority of their income through stock trading, which does not include Charles Schwab or TD Ameritrade.