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20 Things You Didn't Know About Robinhood

Robinhood is an American based company which offers stock brokerage and commission-free trading. The firm whose headquarters are in Menlo Park, California allows its customers to fund public companies. It also facilitates them to conduct business with financial institutions listed in the U.S stock exchange without paying any commission. The company which is registered by the Financial Industry Regulatory Authority also allows investors to access its services through a smartphone mobile application. Customers can find the organization's application in Apple watches, iPhone mobiles, and Android phones.

1. Former college roommates founded it

Robinhood was founded in 2014 by two former Stanford roommates, Baiju Bhatt, and Vlad Tenev. The two roommates have been quoted saying that the idea of creating Robinhood came when they saw how people were being overcharged when conducting online trading. The duo aimed to open up trading to a new population since the complicated trading platforms tend to discourage young people from entering the trade market. They sought to make trading to be friendlier, approachable, and understandable both for newcomers and experts. Vlad Tenev has gone on record to say that their main objective is to make Robinhood a full-service organization that will offer the same financial services as banks.

2. It has over 4 million users

Since it does not charge any fees for stock trading service, Robinhood has managed to attract millions of users since its first launch in 2013. With a user base of over 4 million customers, Robinhood ranks among the top preferable financial trade platforms. While interviewing with Business Insider, Robinhood's co-founder Vlad Tenez said that when they first started, people had very little faith in them. He added that getting the initial start-up capital was a massive problem for them, but their being persistent led them in the right direction. As a result, the company now has a steadily growing customer base.

3. Robinhood has executed over $30 billion in trades.

One report shows that approximately 50% of users who have traded using the Robinhood app conduct 90% of their financial trades with the app. As of February 2017, the company had already executed over $30 billion trades. Its primary source of income comes from interest gained on customers' cash balances and margin lending. Before 2019, the company's primary source was from payment for order flow. However, in a 2018 statement, the company announced it was ending this form of revenue generation by dropping its in-house clearing agency. According to the company's 2018 funding report, Robinhood was valued at an estimated $5.6 billion although Bloomberg has reported the firm is in search of more funding. The move could see the company' value go up to $10 billion in one year.

4. 'Free Trading' on Robinhood is not free.

As much it is free to set up an account, and execute trades, the company charges its clients a monthly fee for providing its margin-lending solution known as Robinhood Gold. The app requires customers to pay a 75 dollar fee if they need to move their account from Robinhood to a different broker. There is also the cost included in stock prices.

5. It is the first app company to win the Apple Design Award.

Robinhood's success did not only commence on convincing investors pumping funds into the start-up. There is much more to the success of the app than significant investments; the company is run by talented individuals who are skilled technicians and market observers. Due to its rapid growth, Robinhood was honored to get the Apple Design Award for its outstanding application design. It is a quite an achievement since Robinhood is the first finance company ever to win the award.

6. Robinhood recently rose $323 million

The company has managed to quadruple its valuation in one year through introducing a web version of its app, cryptocurrency, and stock option trading. An anonymous source disclosed that Robinhood is currently sealing a $350 million deal in capital pioneered by a Russian firm called DST Global. The source also revealed that just 11 months after Robinhood confirmed TechCrunch's agreement, the zero-fee stock trading had raised an $11 million series at C valued at $1.3 billion. The new raise would bring Robinhood to $526 million in funding.

7. The company has introduced a new trading service

The company's customers can now access more significant automatic deposit at the cost of only $5 every month. The firm also provides up to $1000 at a zero interest rate for subscribers who decide to trade with margin. Competitors are seeing these moves as the firm's effort to become a convenient trading platform for the modern generation of investors. The company's Chief Executive Officer has been quoted saying that his firm's goal is to technologize the world of electronic trading. He also aims to make it easily accessible by people who have little knowledge about trading.

8. Robinhood is the best gateway for new investors

Since the company's introduction in 2013, the new dealer has been recording a continuous growth in the number of customers. The application allows its customers to trade on cryptocurrencies at no charges. The application's interface is also user-friendly, and it will enable traders to do business with the lowest capital possible. According to Nerd Wallet, if you plan to invest with limited funds, Robinhood is the place to be.

9. Robinhood allows trades in seven different cryptocurrencies

The app allows its customers to conduct trades via seven cryptocurrencies, namely; bitcoin, Bitcoin Cash, Bitcoin SV, Ethereum, Ethereum classic, litecoin, and Dogecoin. The application also supports the movement of prices in ten digital currencies. The service is currently available to users in 39 U.S states with New York being the most recent state to be able to access the new feature.

10. The company is looking to compete with banks

Robinhood is making the competition tight for big financial institutions by abolishing brick-and-mortar branches. Its latest service features zero overdrafts and monthly maintenance fees for its customers. The service which provides clients with a 3% interest rate claims more United States ATM's than any of the biggest banks in the U.S do. Robinhood is using the scalability of software to provide the best offers to its customers. The approach could make Robinhood compete effectively against banks such as Wells Fargo, Bank of America, and Chase Bank.

11. Robinhood is a safe company to invest in

Customers on Robinhood can do their business activities in peace since the application is ensured by the Security Investors Protection Corporation up to $500,000 for securities and up to $250,000 cash claims. Apart from that, the firm is also regulated by the Financial Industrial Regulatory Authority, meaning that the company is safe to trade with because it operates within online trade regulations.

12. Robinhood app is the most simplified trading application

Opening an account with applications is very streamlined and straight forward. Customers only need to submit their request, and as soon as they transfer funds to their Robinhood accounts, investors can start buying and selling stocks, ETFs, and cryptocurrencies. The company offers a different interface for customers who are not conversant with the procedure of purchasing and selling shares on the sleek Robinhood layout. Adam Enfroy, a financial blogger with more than 100,000 monthly readers, opines that Robinhood is the number one investment app to use. The blogger published that Robinhood has made it possible for a new breed of investors who are not economists and computer gurus to stake their money in various online ventures without fear of confusion.

13. Robinhood is going to the U.K

The announcement which came in August 2019 stated that the firm has been able to obtain a broker's license to extend its services to the United Kingdom. The company has not announced an official date for the launch of its U.K shop but has revealed that they have a plan to infiltrate U.K's financial market and they already started recruiting the required personnel. According to TechCrunch, the firm announced Wander Rutgers as their head of international operations. Wander will also supervise the firm's activities in the United Kingdom.

14. Robinhood is planning to go public

Just two years ago, a lot of traders were not familiar with the Robinhood trading application. In an interview conducted on September 7th, 2018, the company's Chief Executive Officer Baiju Bhatt disclosed the firm's plans to go public in two years. Baiju also said that his organization is still consulting with the Security Exchange Commission to ensure everything is set before declaring the official date they go public.

15. The company has hired a new Chief Financial Officer

Through an announcement through a blog post, the stock trading firm posted that it has decided to hire its first Chief Financial Officer. The firm recruited the best as it has employed none other than Amazon's former finance vice president Jason Warnick as its C.F.O. According to CNBC Markets, the firm's move is in preparation for its long term plot to be listed as a public company.

16. The firm has its clearing system

In October 2018, Robinhood announced that it had stopped its dependence on third parties for services as it has built its clearing system. Before developing its clearing system, the company had been solely dependent on third parties for services such as settling trades made through the app. Now that the firm has designed its clearing technology, Robinhood can fully control trading processes like settlement, custody, and clearing. According to the Robinhood blog, the new firm-owned technology will help the company extend its various financial products faster than before.

17. The company operates in the United States only

Even though the company has obtained its United Kingdom license, the firm is yet to commence its businesses there. Only U.S citizens can access their services. It is, therefore, illegal to run the Robinhood app by use of a virtual private network because the firm does not have a license to operate in other countries. For an online financial broker to work in one's country, the broker must have permission from the Security Exchange Commission and comply with the specific country's legal requirements.

18. The app received a Google Play Award

On May 20th, 2016, the firm was recognized by Google and awarded the Google Play Award for Best Use of Material Design. The award honored the firm's effort to make its application more user-friendly by using a more straightforward and conclusive user interface. Robinhood was also commended for its outstanding executions of application designs that provide customers with an original and innovative experience. In a statement released by Robinhoods team, the organization expressed its delight on being recognized as an institution that offers clients exemplary services through a unique application layout.

19. The app won a Tech Designs Award

The firm was recognized by the Tech Designs Award in 2015 in the Silver Winner category two years after it started its operation. Robinhood was applauded for making financial and trading services easily reachable to anyone by allowing clients to trade without having a minimum account balance. Their application module was praised for being a simple and attractive layout that has encouraged thousands of people who are subdued to trade by more complicated trading processes.

20. Robinhood admitted to storing customers credentials

Even though the company is currently experiencing massive success with an ever-growing number of users, the firm has from time to time been marred with controversial issues surrounding its operations. In July 2019, the company confessed that some of its user system passwords were accidentally stored in a format that can be read by their system. According to Slashdot, the firm's spokesperson stated that Robinhood has since advised its customers to reset their passwords. It also assured them that the error would never happen again. He also pointed out that their organization has found no proof that their credentials were accessed by anyone who is part of Robinhood's response team.

Garrett Parker

Written by Garrett Parker

Garrett by trade is a personal finance freelance writer and journalist. With over 10 years experience he's covered businesses, CEOs, and investments. However he does like to take on other topics involving some of his personal interests like automobiles, future technologies, and anything else that could change the world.

Read more posts by Garrett Parker

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