Robinhood

Investment Highlights

Company Overview

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 2021, Robinhood has 31 million users.

Robinhood’s story began at Stanford, where co-founders Baiju and Vlad were roommates and classmates.

After graduating, they packed their bags for New York City and built two finance companies, selling their own trading software to hedge funds. There, they discovered that big Wall Street firms were paying next-to-nothing to trade stocks, while most Americans were charged commission for every single trade.

They wanted to change that, so they headed back to California to build a financial product that would give everyone—not just the wealthy—access to financial markets.

The company’s name comes from its mission to “provide everyone with access to the financial markets, not just the wealthy”. Tenev noted that executing a trade cost brokerages “fractions of a penny” but they typically charged fees of $5 to $10 per trade, as well as required account minimums of $500 to $5,000

Robinhood allows cryptocurrency trades to be placed in very small quantities. Most other cryptocurrency-friendly platforms require certain minimums in order to trade.

Robinhood’s mobile app and website are extremely easy to use.

Robinhood is very efficient at getting your cash into the market. All customers have instant access to deposits and immediate access to funds after closing positions, and your buying power is increased as soon as you initiate a deposit into your account.

In late June 2021, Robinhood was fined $57 million by the FINRA and has been ordered to pay $13 million in restitution to clients affected by outages and misleading communications in March 2020. This was the largest-ever FINRA penalty in the history of the organization

Financials

Total Funding (june 2021) – US5.6B

Last funding round (February 2021) – US$2.4B

Enterprise Value US$56B

Robinhood has stock symbol – NASDAQ:HOOD

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