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In a more tranquil market, it’s easy to imagine a gradual transition from deep-discount sharebroker to financial supermarket for the mass affluent. Tenev says he envisions Robinhood as a “large, independent public company” one day, without commenting on the timeline. The company’s unexpected growth this year has likely pulled the prospect of an initial public offering closer, though those plans aren’t imminent, says a senior employee at one of Robinhood’s VC backers, speaking on the condition of anonymity.
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Robinhood could be under even more pressure to prove it can extend beyond free trades if it goes public. When I started putting the money into Robinhood, then I started feeling that same rush. I would get a nice rush from sports betting. The first-time stock buyer can eventually graduate to using services the company has yet to offer, including individual retirement accounts, mortgage lending, car and rental insurance, and life insurance.
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In a slide that said “creating relationships to last generations”, the company said each customer’s value should increase over time. Robinhood enticed big VC investors such as Sequoia Capital with the promise that “customers will grow with us,” according to a 2019 pitch deck. None of that’s unusual any more: free trading is now the industry standard, and Schwab made “stock slices” available in June.īut free stock trading was supposed to be an entry point – not, by itself, the business that earned Robinhood a valuation of $US11.7 billion in its most recent venture capital funding round. It later offered fractional stocks that allow people who can’t afford, say, the almost $US3,200 ($4492) price of a single share to buy just a piece of one instead. So what’s Robinhood’s next act? The core product – stock trading on a fun game-like phone app – is both controversial and widely imitated.įounded in 2013, Robinhood courted long-ignored small-dollar and novice investors by charging zero commissions on trades. He wears his hair shoulder-length, and like a lot of guys in these pandemic days, he’s sporting some facial hair –in this case, a goatee. “Over the next few months, you’ll continue to see the results of all of that work that we’ve been putting in,” Tenev says in a video chat. Instead, the company has been on a hiring spree for support staff and is focusing on making its technology more dependable. It’s paused efforts to expand into Europe and Asia. For Robinhood, though, the most urgent need is to get it right – to prove it can manage a simple online trading platform and overcome a reputation for poor customer service. It’s the kind of moment when companies seize the chance to go big. “Robinhood traders” became the shorthand explanation for the frenzy of often speculative retail investing in the pandemic lockdowns. Americans marooned at home binge-watched Netflix shows, went shopping on Amazon Prime, and discovered day trading on their mobile phones. It had several disruptions to trading and data from March through June, which sounds like a disaster for an upstart trying to draw customers away from Charles Schwab and ETrade Financial and to position itself as the money app for Millennials and Generation Z.įounded in 2013, Robinhood courted long-ignored small-dollar and novice investors by charging zero commissions on trades.īut no: Robinhood would become one of the COVID economy’s breakout successes. The incident was the first tremor in what would become a prolonged period of turbulence for the online brokerage. (Both the regulator and Robinhood declined to comment on any investigations.) Robinhood’s core product – stock trading on a fun game-like phone app – is both controversial and widely imitated.Īlthough Robinhood managed to restore the app’s service, its handling of the episode angered customers and drew an inquiry from the US Securities and Exchange Commission. Robinhood’s malfunction consigned its customers to the sidelines while more than 14 billion shares of US equities changed hands. Spooked by the early spread of COVID-19, US stocks had gone through a harrowing sell-off and then surged back.
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The company faced an emergency: a system-wide outage had disabled its online trading app throughout one of the sharemarket’s busiest days in months. Executives huddled around co-founder Vlad Tenev, then disbanded to bring orders back to their teams. On March 2, just before offices shut across the US, the staff at Robinhood Markets worked long after sunset in their Menlo Park, California, headquarters.