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by Alexander Solomon
Robinhood Markets, Inc. is an American financial services company headquartered in Menlo Park, California, known for offering commission-free trades of stocks and exchange-traded funds via a mobile app introduced in March 2015. Robinhood is a FINRA-regulated broker-dealer, registered with the U.S. Securities and Exchange Commission, and is a member of the Securities Investor Protection Corporation. The company’s revenue comes from three main sources: interest earned on customers’ cash balances, selling order information to high-frequency traders (a practice for which the SEC opened an investigation into the company in September 2020) and margin lending. As of 2020, Robinhood had 13 million users. (reference from Wikipedia)
Techcrunch.com published on May 7, 2015 the article “Zero-Fee Stock Trading App Robinhood Nabs $50M From NEA To Go Global”.
It stated, “Bringing the largest VC firm in history into the round is very confidence-inspiring for customers”, co-founder Vlad Tenev tells me. With 25% being first time traders, Robinhood’s users have transacted over $500 million on the app to save $12 million in fees to date.
Together, they developed the Robinhood IOS app where you can track stock performance and trade with no commission.
Robinhood raised a $3 million seed from Index Ventures and Andreessen Horowitz in late 2013. Once it’d received clearance from the SEC and locked down security, Robinhood opened a waitlist in February 2014, and by September when it raised a $13 million Series A led by Index, it had a half million people wanting in. The app began rolling out in beta in December, launched publicly in March, and already has an Apple Watch interface.
On 17 June 2020, CNBC published “Fintech app Robinhood is driving a retail trading renaissance during the stock market’s wild ride.”
The following were some of the highlights.
- Retail stock trading app Robinhood has grown from 1 million to 10 million users since 2016.
- The start-up, launched in 2013 with a free-trading model, has been mimicked by incumbent brokerage firms including Charles Schwab, Fidelity and TD Ameritrade.
- Retail brokers are seeing record new account openings this year despite the pandemic.
- Robinhood snared a spot on CNBC’s 2020 Disruptor 50 list, released Tuesday.
The article futher stated. For a trading firm, there are few bigger blunders than clients being unable to move money when markets hit historic highs.
Yet that’s exactly what happened at start-up brokerage firm Robinhood earlier this year. The aftermath? A surge in new users, record trading activity and a new round of venture capital funding.
Despite its missteps, the company has quickly ushered in 10 million users, most of whom are millennials and new entrants to the stock market. Robinhood’s free-trading model kicked off a wave of fee-slashing that turned the brokerage industry on its head.
According to Wikipedia, on January 25, 2018, Robinhood announced a waitlist for commission-free cryptocurrency trading. By the end of the first day, the waitlist had grown to more than 1,250,000. Robinhood began offering trading of Bitcoin and Ethereum to users in California, Massachusetts, Missouri, and Montana in February 2018. In May 2018, Robinhood expanded its trading platform to Wisconsin and New Mexico.
In June 2018, it was reported that Robinhood was in talks to obtain a United States banking license, with a spokesperson from the company claiming the company was in “constructive” talks with the U.S. OCC.
CNBC published on 29 January 2021, “Robinhood and Reddit: A timeline of two apps tormenting Wall Street” and stated ‘Founded within 15 months of each other, Robinhood and r/wallstreetbets each grew slowly at first and then in a sudden rush in recent months.’
Oct. 14, 2013: Robinhood wins approval from the Financial Industry Regulatory Authority to operate as a stock brokerage, allowing it to expand beyond just tracking stocks.
Nov. 9, 2018: Though Robinhood isn’t a star yet, its business model is coming under more scrutiny. The Wall Street Journal details in story how Robinhood sells “order flow” to electronic trading giants such as Citadel Securities. Ordinary investors may pay a slightly worse price while trading, while giants make money through more efficient trades. Robinhood had disclosed the controversial but legal practice way back in 2013.
People published on 19 February 2021, the article ” Robinhood CEO Addresses App User Who Died by Suicide Believing He Owed More Than $730,000: ‘It Was a Tragedy’ “
Robinhood CEO Vlad Tenev is apologizing to the family of Alexander Kearns, a 20-year-old who died by suicide last year believing he owed more than $730,000 on the trading app.
Tenev was asked about tragic incident during Thursday’s Congressional hearing into the recent rise and fall of GameStop stock, in which he and several prominent executives — including Reddit CEO and co-founder Steve Huffman and Melvin Capital CEO Gabriel Plotkin — testified in front of the U.S. House Financial Services Committee.
On February 24, 2021, The Verge published “GameStop stock just jumped 100 percent, and WallStreetBets is ecstatic”
It stated. GameStop is up… again, by a lot. Before market close on Wednesday, the video game retailer’s shares started to soar, and GME just closed at $91.71 — up nearly 104 percent for the day.
It’s the highest the stock has been since it fell back down to Earth at the beginning of the month following the unprecedented, Reddit-fueled rally that sent it as high as $483 a share. Over the course of the afternoon, trading on the stock was halted twice.
Disclaimer: This is not a paid or sponsored article. The sources and information quoted are to correct time of reference. Opinions herewith are not intended to market make or manipulate trading interests of any parties. Readers may/may not forecast trading decisions from these findings. Alexander Solomon bears no responsibility to market adjustments due from publish of this report.
Alexander Solomon is an independent industry commentator and the author of adventure novels ‘Aces High @ 23 Wall Street’ and ‘F-A-M-E ‘ze Great’. He has worked in Singapore Police Force, Singapore International Monetary Exchange, Singapore Exchange, Mediacorp and Philip Capital.