Before Robinhood, anyone who wanted to invest in stocks, ETFs or options would be charged between $5 to $10 a trade. They also needed to invest a minimum of $500 to open an account.

Vladimir Tenev and Baiju Bhatt (co-founders) had previous experience building these systems and saw the extraneous costs as little more than gatekeeping younger and poorer people out of investing.

“We are not setting any account minimums, which we think unlocks a market of investors who couldn’t do this before,” said Bhatt to CNBC at launch. “We see Robinhood as unlocking the microinvestor market.”

Robinhood was popular even before launch. In 2014, 340,000 people had signed up to the app’s waitlist, by March 2015 (a month before it launched), that figure had doubled to 700,000. Fans from Europe, Australia and South America filled Robinhood’s forums, pleading for the app to launch in their country.

That dedication has remained, despite most of the stockbroking apps lowering minimum deposit and commissions, in some cases to zero, to entice younger users. Charles Schwab, E-trade and TD Ameritrade all updated their commission fees in 2019, brazenly going after Robinhood’s adolescent crowd.

Even though Robinhood advertises itself as a “free” app, it still generates income through a process called payment for order flow. Essentially, when a person trades on the app, Robinhood sends that trade to a larger entity, which is able to leverage thousands of orders at once for a slight advantage. The larger entity then compensates Robinhood for the orders.

For a single trade Robinhood often receives less than a penny. However, as Robinhood has scaled up to 13 million users, it has started to generate significant amounts from the practice.

The company also generates income from account interest and Robinhood Gold, which lets users trade on margin, make larger deposits and access professional reports from Morningstar. However, according to Fortune, payment for order flow is the primary form of revenue generation.

Payment for order flow is rather controversial, especially as Robinhood has marketed itself as an “anti-Wall Street” stockbroker. Consumer advocates and regulators believe it creates a conflict of interest, as the stockbroker is looking to route orders to the market maker which pays the most.

Robinhood has tried to alleviate concerns by adding controls to orders and assuring users they always seek the market maker with the best execution quality. But, in December 2019, the company was fined $1.25 million by a brokerage industry regulatory for failing to ensure customers received the best prices.

The suicide of Alexander E. Kearns, a University of Nebraska student who regularly used the app, also brought to light Robinhood’s lack of clear warnings and education content for novice traders. It has since added additional criteria and more tools to learn about stock trading.

In January 2021, Robinhood was at the centre of Reddit’s /r/WallStreetBets battle against hedge funds, several of which had heavily shorted GameStop. Thousands of activist investors began buying GameStop stock, forcing a “short squeeze” on the hedge funds, costing them up to $70 billion to date. Robinhood halted trading of GameStop and a few other stocks for a few days, which caused a wave of backlash against the startup, as the move was seen as appeasing Wall Street. It has since resumed limited trading of these stocks.

In the past year, Robinhood has scaled back ambitions to launch in other countries. It had a waitlist in the UK, but recently said plans to launch were delayed indefinitely. Australian plans are on a similar hiatus.

Since Robinhood’s arrival in the US, there have been similar attempts to mimic the app. Fintech startup Revolut launched a zero-commission trading app in 2018 and Freetrade launched iOS and Android apps for UK users in 2019.

Robinhood would also struggle to create the same revenue model in the UK, as payment for order flow is banned.

While it hasn’t expanded to other countries, it launched Robinhood Crypto in 2018. As usual, it started with a waitlist, which reached 1.2 million in one day. It offers all of the major cryptocurrencies, like Bitcoin and Ethereum, Dogecoin and Litecoin. It also launched a savings account in December 2019, with a 1.8 percent interest rate.

We’ve collected data and statistics on Robinhood, including its users, revenue, transactions and competition. Read on below to find out more.

Robinhood Overview

Launch date18 April 2013
HQMenlo Park, California
PeopleVladimir Tenev and Baiju Bhatt (co-CEO’s), Jason Warnick (CFO), Gretchen Howard (COO)
IndustryStockbroker and cryptocurrency
Company typePrivate

Robinhood Users

20140.5 million
20161 million
20172 million
20186 million
201910 million
202013 million

Sources: ForbesFortuneRobinhoodPymntsNYT

Robinhood Revenue

2015$2.9 million
2016$9.3 million
2017$21 million
2018$69 million
Q1 2020$91 million
Q2 2020$180 million

*Only payments for order flow revenue, which reportedly accounts for between 40 to 55 percent of all Robinhood revenue. 

Sources: AlphacutionCNBCForbes

Robinhood Total Transactions

2015$500 million
2017$50 billion
2018$100 billion
2019$150 billion

Sources: Robinhood (2)IndexVenturesFinanceMagnates

Robinhood Valuation

2017$1.3 billion
2018$5.6 billion
2019$7 billion
May 2020$8.6 billion
August 2020$11.2 billion
May 2020$20 billion

Sources: TechCrunch (2) (3)CNBCFT

Robinhood Rivals: Competitors and Alternatives

E-TradeOffers a large variety of investable securities, but still has a commission fee. Recently purchased by Morgan Stanley for $13 billion
Charles SchwabSimilar to E-Trade, but recently reduced most commissions to zero to compete with Robinhood
FreetradeRobinhood’s closest competition in the UK, if it ever launches in the country
eToroAnother popular trading broker with younger generation. Popular across Europe, but has commission and withdrawal fees
BinanceAs Robinhood steps into the crypto world, it will have to face off against Binance, the current leading platform

Robinhood Assets Under Management Comparison

Robinhood$20 billion
E-trade$600 billion
TD Ameritrade$1.3 trillion
Charles Schwab$3.8 trillion

* Assets under management means the total market value of all investments a company holds. 

Sources: TopRatedFirmsBrokerage-Review (2)

Robinhood Average Account Size Comparison

Robinhood$1,000 to $5,000
TD Ameritrade$110,000
Charles Schwab$240,000

Key Robinhood stats and facts

  • Robinhood’s second quarter revenue in 2020 eclipses all revenue made between 2015 to 2018
  • The average age of a Robinhood user is 31 (NYT), relatively young compared to other investment apps. The age has increased since the app launched, in 2015, the average age was 26 (WSJ)
  • Robinhood has raised a total of $1.5 billion in 13 funding rounds (Crunchbase), and claims to still have not spent most of the funding
  • Robinhood was the 10th most downloaded financial app in 2018 and 2019, but has since reached 4th and 7th in the iOS and Android app stores, respectively (SensorTower)
  • Robinhood suffered from two major outages, on March 2, 2020 and March 9, 2020, which were seen as critical days by stockbrokers, due to the enforcement of many regional COVID-19 lockdowns (The Verge)
  • The acquisition of TD Ameritrade by Charles Schwab for $26 billion and Morgan Stanley’s $13 billion acquisition of E-Trade are all considered to be the result of “creative disruption” caused by Robinhood (CNBC)
  • Robintrack, a site that tracks daily activity of Robinhood users, attracted the attention of many investors on Wall Street, as a way to aggregate young investor interests (Bloomberg). It recently announced it was shutting down, after Robinhood curtailed access to the data (Yahoo)
  • In 2019, several users reported an ‘infinite money’ glitch, which allowed investors to borrow endless amounts of cash (TechCrunch), Robinhood has since fixed the issue

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