Crypto trading is the least notable reason why they are valued so high. Real reasons:<p>1) Large number of users<p>2) Large number of <i>younger</i> users (Millennials love Robinhood)<p>3) High amount of use per user (due to no fees)<p>They are still a growth company. If they add IRAs (they said they would soon), Website (currently in closed beta), Options (currently in closed beta), and OTC (not sure if they will), then they'll likely be the top broker for individuals.
Robinhood is the only one among the new batch of fintech startups that <i>encourages</i> active trading. Their entire UI is built to optimize for <i>ease of trade</i> rather than thinking in terms of portfolio objective and diversification.<p>Contrast that to Wealthfront, Betterment, or Acorn - they're all built on the "buy and hold" philosophy. They use technology to automate allocation, tax reduction and rebalancing, while investing solely in index funds. How these two trends play out is fascinating to watch.
Robinhood gets their revenue from margin interest lending to people who can't afford to invest but do it anyways. And also from selling the trading data to high frequency traders to front-run the Robinhood traders. The top guys at Robinhood all have HFT background and connections.<p>Their pr message is priceless but a sham. The users are the real product, with all that we know goes with that.
I appreciate the zero commission trading, but at the same time, I'm worried about the attitude towards "investing" that they promote. Most people should arguably be putting their money into index funds and holding for the long term[1], not picking individual stocks and following price movements on a daily basis. I wouldn't criticize anyone for speculating (i.e. gambling) with money they can afford to lose. I've done that before, and I know how fun it can be. But it shouldn't be the primary strategy for most people. We should be signing up with Betterment/Wealthfront/Vanguard before Robinhood.<p>I have the Robinhood app but haven't made any trades yet. I had to turn off push notifications for things like "Snapchat declined 5% today". That kind of thing is what causes people to trade on their emotions, a great starting point for losing money in the long term. Instead of buying low and selling high, they end up doing the opposite.<p>[1]: <a href="https://www.bogleheads.org/wiki/Getting_started" rel="nofollow">https://www.bogleheads.org/wiki/Getting_started</a>
Cryptocurrency trading is very volatile, speculative and un-regulated.<p>RobinHood is aggressively going after the young and naive "investors" who will quickly be parted from their money.<p>Obligatory Tweet: <a href="https://twitter.com/robinhoodapp/status/756262680537759744" rel="nofollow">https://twitter.com/robinhoodapp/status/756262680537759744</a>
what a fantastically run company. a lot of cynics here but it takes a lot of fortitude and talent to run a startup with this level of mission critical reliability (else they get crushed by users and regulators). I’ve been on record before doubting they could move into crypto so fast, and while the rollout has been slow they have certainly moved far faster than I thought possible.<p>Yes, commission free trading is a complete gimmick and probably bad for you. But they have a $5bn company and I don’t. That is far more value creation than simple armchair criticism.<p>Yes, it’s “just” a trading app. But simplicity is <i>hard</i> and they have threaded that needle incredibly well. They are selling a commodity service but they know how to reach an audience that none of the incumbents can come close to touching.<p>My real thought is: what other industry can you do this to?
What people don’t realize is that these 0$ trading commissions just make it up in their routing of the transactions. You’re not going to get the best price.<p>Use interactive brokers if you want a good price. Flat fee is higher but the trade routes are great.
My biggest issue is their customer support. Downloaded the app, went through all the sign up information, used an affiliate link so I should get one free random stock. Never heard anything. My account was never activated.<p>After 2 months of waiting I emailed support, and they said my account raised a flag and that's that. Nothing more I can do.<p>With Capitol One Investing going away I wanted to send my portfolio over.<p>Stock trading shouldn't have the same customer support issues Google is known for.
I think RH is great for experienced investors and newcomers like my GF. She always wanted to get into investing but though learning curve is too steep with all the terminologies etc. Anyways, I told her to try RH.She loved it. It's one of the best and simplest trading apps ever designed IMHO. Anyways after using RH for 1 years she ended up opening Betterment and 401k account last year.<p>I think RH is great way to learn and enter into stock markets. You only learn by trading and losing money.<p>I also think they shouldn't have entered crypto now. Its too early and it just makes RH look more of YOLO traders/gambers targeted app.
I tried my hand at algorithmic trading. It was an interesting experience because I have no experience with stocks, only trying it with digital currencies as a possible platform to eventually move to my portfolio. I found that the bot was just dominated by larger overall market movements. For example in the bull market, nothing I can do wins! It was an interesting lesson and I like how the markets run 24 hours. But I wonder what the end game of algorithmic trading is. Everyone can't run the same algorithm can they? My naive approach was moving average crossover, and using neural network or random forest, to train based on what the market looks like, to pick the "windows" for the EMA. Anyone else tried that?
I wonder if they're able to separate their cryptocurrency risk from the rest of their brokerage. I figure I'm insured to the $500k limit by their SIPC/FINRA insurance, but it'd be annoying if they lost millions of dollars of tokens and went out of business because of it.<p>Or are they somehow insured against <i>that</i> risk? I'd find that hard to believe.
Slightly off topic, but these huge rounds at Robinhood, Airtable and Doordash a few days back underscores how the Valley is still the place to be. There have been a number of posts in HN over the last few years about how another region is about to overtake SV, but the facts still don't align.
I can't wait to access their web/desktop version! Phone has been nice.<p>As far as monetization goes, even if robin hood was $5-10/month it'd still be fun for a beginner investor like myself, i just dread the idea of per-trade fees on my single-stock purchases.
I would love to know what the goal is here. Interactive Brokers has traditionally been the finest model of how to run a low cost brokerage. They have great tools, and charge an appropriate amount for a good sustainable business, unlike etrade and the such.<p>And despite having a small fraction on the market share and a small fraction of the markets available, RH raised at the same value as IB'S market cap. The only reasons I can think for this is that RH has a plan on how to become scummy like etrade, or SV doesn't know how to value brokerages.
I really wish Robinhood supported DRIPs, I'd move to them in a heartbeat. It seems like such low hanging fruit for a brokerage, way less work than crypto trading. Just not sexy enough I guess.
Robinhood (.. Markets, Inc ) is split into "Robinhood Financial LLC", "Robinhood Crypto, LLC"<p>It looks that the RH Financial LLC is good enough capitalized but I wonder why they split up into 3 different entities? Or is that usual practice?<p>The latest SEC filing for RF Financial: <a href="https://www.sec.gov/Archives/edgar/vprr/1701/17016683.pdf" rel="nofollow">https://www.sec.gov/Archives/edgar/vprr/1701/17016683.pdf</a>
DST coming in, that probably means they are interested in internationalisation of the product, which would be interesting. There are many people who know about US-based company but can’t really invest because stock-trading options outside of the US are even worst.
Does anyone know their plans to expand to other countries? I am curious how they will manage to apply to different laws and fee structures overseas. Expanding with the premium option only would also make sense to me.
Who noticed that the graphs on the two phones in the second graphic are vertical mirror-images of each other? i.e. on the left is "Bitcoin" and on the right is "very-large-number-minus-Bitcoin"
I love the business model of taking the old-school industry and offer the basic use for free with slick UI and modern look. WOnder if this model can be applied to other fields.
Seems like Robinhood has some scaling issues. Anyone who is serious about investing wants access to a web client or an official API... how long has it been now? Still on the waiting list for Robinhood Web. Ended up transferring all my money out until they make it more friendly for 'power users.'<p>Maybe that isn't their intended audience, though.