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Stock trade app Robinhood raising at $5B+, up 4X in a year

• rak00n 9y ago
  Sounds like we should have invested in Robinhood instead of buying stock from them.
• kylehotchkiss 9y ago
  I can't wait to access their web/desktop version! Phone has been nice. As far as monetization goes, even if robin hood was $5-10/month it'd still be fun for a beginner investor like myself, i just dread the idea of per-trade fees on my single-stock purchases.
  • chrisabrams 9y ago
    You do realize you pay fees it’s just baked into the price? It’s pretty impressive how they’ve worked it out.
    • lawrenceyan 9y ago
      That's only true in the most technical of senses. Yes, there is a spread, but other brokerages take a spread AND additionally charge you another fee on top of that which is often an outrageous $5-10.
      • jonknee 9y ago
        That outrageous $5-10 probably helps the average person make money in the long run by not overtrading.
      • nerfhammer 9y ago
        depends, how big is the spread?
        • lawrenceyan 9y ago
          The spread is generally on the order of a cent.
        • Blackthorn 9y ago
          The same as literally any other brokerage.
    • bobcostas55 9y ago
      Not really, just because they're selling order flow doesn't necessarily mean the customer gets a worse deal. Robinhood still has to follow reg nms, they have to fill you at the NBBO.
      • nicholas73 9y ago
        But is their NBBO worse than other firms (worse routing options)?
        • Blackthorn 9y ago
          That's literally a contradiction. Look up what NBBO actually means.
          • wocram 9y ago
            It's actually more complicated, nbbo governs quotes but there are a few other things that affect your actual trade price such as exchange fees and price improvement. For example, every exchange can have the same quote, but a different liquidity fee.
  • sagiv6 9y ago
    There's a free open source desktop version already available: https://www.stockstalk.club https://www.stockstalk.club
  • yalla 9y ago
    You already have a desktop version of Robinhood available as an open source - http://bit.ly/2FJXl7b http://bit.ly/2FJXl7b
  • betterworldb 9y ago
    Web / desktop version is out in the beta. You can signup to get on the waitlist here: https://robinhood.com/#web https://robinhood.com/#web
• KasianFranks 9y ago
  They're enabling crypto trading for millions too. This is big.
• SSilver2k2 9y ago
  My biggest issue is their customer support. Downloaded the app, went through all the sign up information, used an affiliate link so I should get one free random stock. Never heard anything. My account was never activated. After 2 months of waiting I emailed support, and they said my account raised a flag and that's that. Nothing more I can do. With Capitol One Investing going away I wanted to send my portfolio over. Stock trading shouldn't have the same customer support issues Google is known for.
  • cloakandswagger 9y ago
    Hello fellow Capital One Investing refugee. I too was thinking about moving my portfolio over to Robinhood, but they'll need a web app before I'll make the jump. I'd say I'm only a semi-active trader (maybe 2-3 trades a day) and it's still hard to envision doing that on a mobile device.
    • serf 9y ago
      they now have a web-app. it might be invite-only, not sure, but I have been using their web app for 3 weeks.
      • kylorhall 9y ago
        Don't even think it's invite-only, just an unannounced "beta". I didn't get an invite and went to what I expected the url to be and was able to login just now. Will probably never really use it over the Android App, but glad it exists.
    • asdsa5325 9y ago
      Their web app is in closed beta right now
  • halflings 9y ago
    Same situation here. They actually deactivated my account when I asked them why it still wasn't enabled after 3 months (even if I did send them all the info they asked for; even had to send it twice!)
• justboxing 9y ago
  Cryptocurrency trading is very volatile, speculative and un-regulated. RobinHood is aggressively going after the young and naive "investors" who will quickly be parted from their money. Obligatory Tweet: https://twitter.com/robinhoodapp/status/756262680537759744 https://twitter.com/robinhoodapp/status/756262680537759744
  • swarnie_ 9y ago
    For reference, see /r/wallstreetbets
• ipsin 9y ago
  I wonder if they're able to separate their cryptocurrency risk from the rest of their brokerage. I figure I'm insured to the $500k limit by their SIPC/FINRA insurance, but it'd be annoying if they lost millions of dollars of tokens and went out of business because of it. Or are they somehow insured against that risk? I'd find that hard to believe.
  • RandomInteger4 9y ago
    Looks like, at the moment, they don't support deposits or withdrawals of the cryptocurrency you're trading, so if anything, they seem more like ETNs of the cryptos than the actual cryptos themselves? I imagine it's for the reason you stated until they get the security protocols in order. Not sure how they're getting around SEC approval, unless it's something sort of like an IOU loophole where you can only sell the IOU, but not redeem it for the coins yet per their terms of service? I have no clue.
• asdsa5325 9y ago
  Crypto trading is the least notable reason why they are valued so high. Real reasons: 1) Large number of users 2) Large number of younger users (Millennials love Robinhood) 3) High amount of use per user (due to no fees) They are still a growth company. If they add IRAs (they said they would soon), Website (currently in closed beta), Options (currently in closed beta), and OTC (not sure if they will), then they'll likely be the top broker for individuals.
  • lewisl9029 9y ago
    After using Schwab for both my banking and investments for more than a year now, I'm convinced that the most under-appreciated killer feature for a brokerage is actually cash management (i.e. a checking account you can pay bills from). Managing both my banking and investments at Schwab allows me to keep $0 in my checking account, and make use of their overdraft transfer feature to debit my investment account whenever I make a purchase or bill payment from it. If there's insufficient cash in my investment account at the time of the debit, I have the option to cover the remaining amount with margin borrowing, which usually ends up costing cents in interest since I generally sell a few shares to cover for it in the same day (trades take 2 days to settle though, so some interest will still accrue). I feel that's a tiny price to pay for the ability to keep myself fully invested as much of the time as possible, and practically speaking, I rarely ever have to resort to margin borrowing anyways since I time my bills to match my direct deposits (which go directly into my investment account). Essentially this means I only have 1 account to worry about to manage all my finances, and don't have to juggle money around between a checking account for spending and investment account for growth. This might not sound like it'd make much of a difference, but I honestly can't imagine ever going back to managing my finances the old fashioned way with multiple accounts. Needless to say, I can't see myself switching to a new brokerage that doesn't also offer cash management features of the same caliber (and AFAIK, Robinhood doesn't, but I'd love to be corrected).
    • zazpowered 9y ago
      Bank of America basically has this with Merill Edge and you also get free trades if you have over $50k
• dguo 9y ago
  I appreciate the zero commission trading, but at the same time, I'm worried about the attitude towards "investing" that they promote. Most people should arguably be putting their money into index funds and holding for the long term[1], not picking individual stocks and following price movements on a daily basis. I wouldn't criticize anyone for speculating (i.e. gambling) with money they can afford to lose. I've done that before, and I know how fun it can be. But it shouldn't be the primary strategy for most people. We should be signing up with Betterment/Wealthfront/Vanguard before Robinhood. I have the Robinhood app but haven't made any trades yet. I had to turn off push notifications for things like "Snapchat declined 5% today". That kind of thing is what causes people to trade on their emotions, a great starting point for losing money in the long term. Instead of buying low and selling high, they end up doing the opposite. [1]: https://www.bogleheads.org/wiki/Getting_started https://www.bogleheads.org/wiki/Getting_started
  • ozmbie 9y ago
    The whole software/startup approach is currently based on user growth which relies on retention, trigger, actions, and rewards. Long-term investments don’t fit that model so there is no incentive for them to encourage that form of user behaviour.
    • tysonzni 9y ago
      User retention is arguably linked to capital preservation. So they do have some incentive to ensure people don’t lose their investments by trading too much. When the market gets more volatile or if there’s a sharp downturn, that would become a big issue. Not sure they had to address this yet because since 2014 their founding year the market had been on a smooth, upward trajectory. A recession however is already around the corner.
  • vikascoder 9y ago
    That's a good thought but zero commision doesnt really change the investment attitude that much apart from the fact that it makes very low value plays possible. There are tons of people having the same speculative investment behaviour on both sides of the line especially on larger bets. It's the smaller bets that Robinhood makes possible. I would also argue that Robinhood is a great playground to learn trading at minimal cost. I have tons of freinds with 500 dollar portfolios playing around and learning the ropes. This was seldom attractive with web based serious accounts. In the end it's all about discipline and eventually Robinhood users reach the same investment mindset as regular account players very soon.
• justonepost 9y ago
  What people don’t realize is that these 0$ trading commissions just make it up in their routing of the transactions. You’re not going to get the best price. Use interactive brokers if you want a good price. Flat fee is higher but the trade routes are great.
  • bcherny 9y ago
    I mean, average portfolio size for Robinhood users is probably in the $1k-10k range. How much does your 22 year old cousin care whether she pays $325.60 or $325.62 for a share of TSLA? For individuals it’s negligible, but for the HFT firms whose kickbacks make up most of Robinhood’s revenue, this adds up.
    • austenallred 9y ago
      Yeah, worst case scenario use a limit
      • barnabes 9y ago
        Do limits guarantee a price?
        • rifung 9y ago
          No but they put an upper bound on it which is likely what people would care about anyway
          • deleted 9y ago
            [deleted]
  • prklmn 9y ago
    I can assure you that most robinhood users don’t have the slightest idea of what trade routing means. Also, I doubt there are many accounts placing big enough trades routinely for routing to have a material impact.
  • 9y ago
• swyx 9y ago
  what a fantastically run company. a lot of cynics here but it takes a lot of fortitude and talent to run a startup with this level of mission critical reliability (else they get crushed by users and regulators). I’ve been on record before doubting they could move into crypto so fast, and while the rollout has been slow they have certainly moved far faster than I thought possible. Yes, commission free trading is a complete gimmick and probably bad for you. But they have a $5bn company and I don’t. That is far more value creation than simple armchair criticism. Yes, it’s “just” a trading app. But simplicity is hard and they have threaded that needle incredibly well. They are selling a commodity service but they know how to reach an audience that none of the incumbents can come close to touching. My real thought is: what other industry can you do this to?
  • mrlala 9y ago
    >and probably bad for you. But they have a $5bn company and I don’t. That is far more value creation than simple armchair criticism. Not necessarily. It's not value creation when you are creating a bubble and letting people do things they probably shouldn't be doing. Did it end up to be "value creation" when banks were allowing people to buy houses with 0% down and variable interest rates? Because from what I hear other people saying about Robinhood, they are making money from interest on margin trading. Meaning they are encouraging their users to be trading on margin and then act like "trading is free, see no commissions!". Yeah that's great until you have millions of people invested long on margin and then the market tanks and they end up losing more than they even had. So yeah, not too sure about the value creation here...
• lend000 9y ago
  Seems like Robinhood has some scaling issues. Anyone who is serious about investing wants access to a web client or an official API... how long has it been now? Still on the waiting list for Robinhood Web. Ended up transferring all my money out until they make it more friendly for 'power users.' Maybe that isn't their intended audience, though.
• tysonzni 9y ago
  Robinhood is the only one among the new batch of fintech startups that encourages active trading. Their entire UI is built to optimize for ease of trade rather than thinking in terms of portfolio objective and diversification. Contrast that to Wealthfront, Betterment, or Acorn - they're all built on the "buy and hold" philosophy. They use technology to automate allocation, tax reduction and rebalancing, while investing solely in index funds. How these two trends play out is fascinating to watch.
  • charlesdm 9y ago
    What remains to be seen is whether passive investing will also be the way to go for the next 20 years. One idea I often hear is that the more money that is being managed passively, the easier it is becomes for an active manager to "abuse" gaps in the market (i.e. when all these funds liquidate all their assets the same time, across the board -- not looking at whether you're selling Google or SmallCapX).
    • infinite8s 9y ago
      That's not abuse, that's a valuable price discovery mechanism. If the whole market was passive there would be no way to determine the true price of an asset.
      • tysonzni 9y ago
        The universe of passive funds or ETFs includes those that track specific industry/sector, size, region and other factors. Even if the whole market is passive, traders could still vote on the valuation of an asset by buying/selling those funds. If everyone is passive, price discovery would be harder but not impossible. But there will always be traders who think they can gain an edge by going active, right?
        • infinite8s 9y ago
          That edge is what drives price discovery.
• mancerayder 9y ago
  Will it be illegal to advertise in June, since it's been deemed Bad?
• deleted 9y ago
  [deleted]
• yalla 9y ago
  I love the business model of taking the old-school industry and offer the basic use for free with slick UI and modern look. WOnder if this model can be applied to other fields.
  • aryamaan 9y ago
    That's a nice perspective. I think it will be more likely to happen where user experience is not so much tied to human interaction like e-commerce. And where network effect is not required eq. social websites. So, places where an user's exp with the business is individualized- like in this case.
• dawhizkid 9y ago
  Employees starting soon better hope there's a board meeting before the fundraise :0
• rdiddly 9y ago
  Who noticed that the graphs on the two phones in the second graphic are vertical mirror-images of each other? i.e. on the left is "Bitcoin" and on the right is "very-large-number-minus-Bitcoin"
• jbigelow76 9y ago
  I really wish Robinhood supported DRIPs, I'd move to them in a heartbeat. It seems like such low hanging fruit for a brokerage, way less work than crypto trading. Just not sexy enough I guess.
  • hackerman12345 9y ago
    Why does it matter? They don't charge fees.
• GreaterFool 9y ago
  Given the complexity of running a stock brokerage service I don't think it's appropriate to call Robinhood an "app"
  • bonoetmalo 9y ago
    Until they're accessible in a cross platform way, as far as the consumer is concerned yeah they're just an app. If Facebook or Amazon were only accessible through an Android or iOS app, it'd be the same, no matter what investments they're making behind the scenes.
  • austenallred 9y ago
    For the end user it’s an app
• braptor 9y ago
  The interface looks pretty attractive
• singularity2001 9y ago
  how can something which is so trivially cloneable be valued so high?
• eden123 9y ago
  Does anyone know their plans to expand to other countries? I am curious how they will manage to apply to different laws and fee structures overseas. Expanding with the premium option only would also make sense to me.
  • sumedh 9y ago
    They are coming soon to Australia for the last 2 years.
• poooogles 9y ago
  Any UK alternatives to this? Been looking at moving away from Barclays which charge you fees out the wazoo.
  • ghostwriter 9y ago
    - https://www.trading212.com https://www.trading212.com - https://freetrade.io https://freetrade.io
    • antouank 9y ago
      Do you pay fees every day, like IG? Just want to go long on some ETFs, not sure what the difference is with IG and trading212.
• beiller 9y ago
  I tried my hand at algorithmic trading. It was an interesting experience because I have no experience with stocks, only trying it with digital currencies as a possible platform to eventually move to my portfolio. I found that the bot was just dominated by larger overall market movements. For example in the bull market, nothing I can do wins! It was an interesting lesson and I like how the markets run 24 hours. But I wonder what the end game of algorithmic trading is. Everyone can't run the same algorithm can they? My naive approach was moving average crossover, and using neural network or random forest, to train based on what the market looks like, to pick the "windows" for the EMA. Anyone else tried that?
• gandutraveler 9y ago
  I think RH is great for experienced investors and newcomers like my GF. She always wanted to get into investing but though learning curve is too steep with all the terminologies etc. Anyways, I told her to try RH.She loved it. It's one of the best and simplest trading apps ever designed IMHO. Anyways after using RH for 1 years she ended up opening Betterment and 401k account last year. I think RH is great way to learn and enter into stock markets. You only learn by trading and losing money. I also think they shouldn't have entered crypto now. Its too early and it just makes RH look more of YOLO traders/gambers targeted app.
• PokemonNoGo 9y ago
  Ask Solem of Celery fame is the principal engineer at Robinhood! Celery is so nice!
  • dyim 9y ago
    Ask is a really, really nice guy too! And he knows nearly as much about synthesizers as he does about async tasks.
• bertil 9y ago
  DST coming in, that probably means they are interested in internationalisation of the product, which would be interesting. There are many people who know about US-based company but can’t really invest because stock-trading options outside of the US are even worst.
• iknowstuff 9y ago
  They are badly needed in Europe.
• kolbe 9y ago
  I would love to know what the goal is here. Interactive Brokers has traditionally been the finest model of how to run a low cost brokerage. They have great tools, and charge an appropriate amount for a good sustainable business, unlike etrade and the such. And despite having a small fraction on the market share and a small fraction of the markets available, RH raised at the same value as IB'S market cap. The only reasons I can think for this is that RH has a plan on how to become scummy like etrade, or SV doesn't know how to value brokerages.
• cleansy 9y ago
  Robinhood (.. Markets, Inc ) is split into "Robinhood Financial LLC", "Robinhood Crypto, LLC" It looks that the RH Financial LLC is good enough capitalized but I wonder why they split up into 3 different entities? Or is that usual practice? The latest SEC filing for RF Financial: https://www.sec.gov/Archives/edgar/vprr/1701/17016683.pdf https://www.sec.gov/Archives/edgar/vprr/1701/17016683.pdf
• fizzledbits 9y ago
  Robinhood gets their revenue from margin interest lending to people who can't afford to invest but do it anyways. And also from selling the trading data to high frequency traders to front-run the Robinhood traders. The top guys at Robinhood all have HFT background and connections. Their pr message is priceless but a sham. The users are the real product, with all that we know goes with that.
  • jldugger 9y ago
    Is any of this a concern for someone looking for a place to follow a simple passive investing strategy in SP500 / AGG?
    • fizzledbits 9y ago
      I was commenting on their business model. I don’t know if the person you described would have anything to worry about, apart from their own moral feeling about the company in general. I won’t use them, because I dislike the entire premise.
  • defertoreptar 9y ago
    Don't forget that huge pile of deposits sitting in user accounts. Banks at least pay interest for those deposits. To be fair, the other brokerages probably do the same exact thing and get $7 on trades.
  • godzillabrennus 9y ago
    Sounds like they engineered a fantastic business model. Am I wrong? Is there downside for the typical consumer in all of this?
    • fullshark 9y ago
      Downside is greedy and ignorant investors adding debt and going bankrupt based on unforeseen market movements.
  • Judson 9y ago
• dmode 9y ago
  Slightly off topic, but these huge rounds at Robinhood, Airtable and Doordash a few days back underscores how the Valley is still the place to be. There have been a number of posts in HN over the last few years about how another region is about to overtake SV, but the facts still don't align.
• subterfudge46 9y ago
  Robinhood is amazing. The app turned me into a saver. I stopped visiting Starbucks because I realised that I could simply buy a CLDT stock every-time I spent $20. I remember countless times when I stepped in a store and bought a stock on robinhood instead of spending money on some object. Last year I did around 4300 transactions on Robinhood. This is unimaginable with something like Fidelity or E-Trade.
• jgalt212 9y ago
  What % of their revenue comes from selling customer order flow?