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I don't know if I might be a little less smarter than average but could someone please enlighten. e on why RobinHood is valued at such an amount? What special p

I don't know if I might be a little less smarter than average but could someone please enlighten. e on why RobinHood is valued at such an amount? What special purpose do they solve that C.S wouldn't copy as a feature or own in the nearest future?

whitepoplar 10y ago
1) Robinhood Gold is margin lending i.e. lending money to customers who want leverage. The monthly fee is effectively the loan's interest rate, rebranded in less shady terms. 2) They have very valuable order flow, which they sell. Almost all of Robinhood's customers are unsophisticated investors. Trading firms pay a lot of money for unsophisticated trading flow as there's room to "skim off the top". 3) Add in the typical "successful VC-backed startup" premium.
- mcguire 10y ago
  "...less shady terms"? I'd say more shady. If you use less than the margin amount that they allow you, that fee looked at as an interest rate can be rather usurious.
  - whitepoplar 10y ago
    Sorry, what I mean to say is that it's very shady, but they try to mask it in innocuous terms.
clock_tower 10y ago
I understand that their advantage is the $0 trading commission. From what I've heard, they have a minimal feature set in order to support commissionless trading, and most of their funding comes from 'float' (interest on unspent money in their members' accounts) -- although, from other comments here, it sounds like this might be changing. Schwab can't copy $0 commissions without removing their reporting tools; I expect the companies will be comfortably able to coexist.
sebleon 10y ago
It's the millennial user base that none of the older brokerages have been able to capture. If Robinhood holds most brokerage accounts of people born after 1980, CS will pay billions to acquire these accounts. While these accounts are small today, the idea is that total AUM will increase significantly as this user base matures and earns more $$$

whitepoplar 10y ago

1) Robinhood Gold is margin lending i.e. lending money to customers who want leverage. The monthly fee is effectively the loan's interest rate, rebranded in less shady terms. 2) They have very valuable order flow, which they sell. Almost all of Robinhood's customers are unsophisticated investors. Trading firms pay a lot of money for unsophisticated trading flow as there's room to "skim off the top". 3) Add in the typical "successful VC-backed startup" premium.

mcguire 10y ago
"...less shady terms"? I'd say more shady. If you use less than the margin amount that they allow you, that fee looked at as an interest rate can be rather usurious.
- whitepoplar 10y ago
  Sorry, what I mean to say is that it's very shady, but they try to mask it in innocuous terms.

clock_tower 10y ago

I understand that their advantage is the $0 trading commission. From what I've heard, they have a minimal feature set in order to support commissionless trading, and most of their funding comes from 'float' (interest on unspent money in their members' accounts) -- although, from other comments here, it sounds like this might be changing. Schwab can't copy $0 commissions without removing their reporting tools; I expect the companies will be comfortably able to coexist.

sebleon 10y ago

It's the millennial user base that none of the older brokerages have been able to capture. If Robinhood holds most brokerage accounts of people born after 1980, CS will pay billions to acquire these accounts. While these accounts are small today, the idea is that total AUM will increase significantly as this user base matures and earns more $$$