Difference between revisions of "Robinhood"
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Revision as of 00:18, 24 April 2021
Robinhood is a financial services company launched on April 18, 2013 by founders Vladimir Tenev and Baiju Bhatt. Headquartered in Menlo Park, California they are known for their mobile app "Robinhood" where users are allowed to trade commission-free stocks and exchange-traded funds.
Vladimir Tenev and Baiju Bhatt founded Robinhood in April 2013. The company's name is a reference to the story of Robinhood, which is also referenced with their mission statement "to provide everyone with access to the financial markets, not just the wealthy". Robinhood is known for being the first trading app to offer commission-free trades and having a user-friendly website and mobile app.
In 2017, A number of venture capital firms including DST Global, Greenoaks Capital, and Thrive Capital funded $110 million to Robinhood bringing the company to a $1.3 billion valuation by the end of the year. The following year Robinhood was funded with another round of investment valued at $363 million. As of 2018, Robinhood has raised a total of $539 million from venture capital funds, ending the year with a $5.6 billion valuation.
In 2019, Robinhood was at the center of a media outburst where outlets reported on Robinhood's announcement about looking for an additional round of investment. In November 2019 Robinhood announced their expansion to the United Kingdom.
In 2020, Robinhood's trading had increased significantly. Robinhood users were said to have caused the market rise before the 2020 stock market crash but a study shows Robinhood users did not have much daily impact on the stocks. As of 2020, Robinhood had 13 million users of its platform.
In 2021, Robinhood halted the trading of the GameStop stock on its platform after a steep increase in trading activity of the stock on its trading platform. One of the founders, Vladimir Tenev, later stated in a 2021 interview that they had to stop trading of the stock to comply with certain financial regulations from their clearing house.
Robinhood is known for a user-friendly interface for both desktop and mobile. The have a minimalistic design throughout the app and website and intuitive layout. Robinhood has followed on its mission to provide finance to everyone through their user interface.
Robinhood also lets the user hold money in their cash account where it remains uninvested and earns a 0.30% APY. The account comes with an account number and a routing number making it easy to pay bills or transfer direct deposits. Robinhood also provides you with a visa debit card that can be used with the users cash account. Users can browse different stock pages or news article in the browse section of the platform. Stock pages can be found by typing in a company name or its ticker. A stocks page includes information including financial statistics, earnings, and general information about the company. The Dividend Reinvestment Plan allows users to automatically invest any dividends earned back into the stock. Users have the option to turn this feature off. With instant deposit, Robinhood will allow a user to borrow money before their deposit settles. The instant deposit limit is determined based on a users current account value and whether they are a Robinhood Gold member. Robinhood will allow its users to have a level 2 trading capability to trade options. Robinhood tells its users that options are a way to actively interact with stocks you're interested in without actually trading the stocks themselves.
Robinhood's membership program is called "Robinhood Gold". With Robinhood Gold, users are able to browse in-depth research, receive larger instant deposits, and receive access to margin. Additionally, Robinhood Gold gives users access to level II market data which includes real time bids and asks directly from Nasdaq.
Robinhood's users have created several online communities on social media platforms. Facebook is home to several pages of communities for Robinhood users to communicate. Many users share trading ideas and post screenshots of their gains or losses. One Robinhood related page on Facebook has around 10,000 followers.
On March 2nd, 2020 Robinhood had a system-wide outage during the largest increase of gain in the Dow Jones. This prevented Robinhood's users from trading any stocks. Another outage happened on March 9th, 2020. This left Robinhood facing three law suits from the outages.
In June of 2020 a student named Alex Kearns committed suicide after realizing he had a negative cash balance of $730,000 in his account. Robinhood faced criticism after it was discovered that the 20 year old student had accused Robinhood of allowing him to risk money. Additionally, Kearns family is filing a law suit against Robinhood.
On September 2, 2020 it was announced that Robinhood was under investigation from the Securities and Exchange Commission (SEC). The investigation comes from the SEC noting that Robinhood failed to fully disclose selling clients' trades to high-speed trading firms. In December 2020 Robinhood paid the SEC $65 million to settle.