Who Owns Robinhood?

Who Owns Robinhood? Robinhood is a brokerage firm that provides commission-free stocks trades through a mobile app. Read this article for more information.

In its early stages, Robinhood stood out as a brokerage industry disruptor. Its main competitive advantage was not charging commissions for stock, option, and cryptocurrency trading. That advantage has been neutralized as most brokerages have agreed to eliminate commissions. Robinhood has developed a strong brand and niche market with young, tech-savvy investors thanks to a simple design and user experience that focuses on the fundamentals despite increased competition. The broker recently added cash management services and a recurring investment feature to attract new customers and deepen the financial relationship with existing customers.

Although Robinhood’s user base has grown exponentially in recent years, the company’s success has increased scrutiny. The platform has also been chastised for untimely outages and intentional trade restrictions amid market volatility in the last year. Many people suspected a conflict of interest, which sparked class-action lawsuits and drew the attention of politicians. As we look at Robinhood, we’ll delve into some of this.

What is Robinhood?

Robinhood Markets, Inc. is a Menlo Park, California-based American financial services company best known for pioneering commission-free trades of stocks, exchange-traded funds, and cryptocurrencies through a mobile app launched in March 2015. Robinhood is a FINRA-regulated broker-dealer, an SEC-registered broker-dealer, and a Securities Investor Protection Corporation member.

It offers a financial services platform that allows users to invest in and trade stocks, exchange-traded funds (ETFs), options, and American depositary receipts via the web and mobile (ADRs). It also enables users to invest in specific cryptocurrencies based on their location. Payment for order flow, premium membership fees, stock loans, interest on uninvested cash, interchange fees related to its debit card, and other smaller revenue streams are how the company makes money.

The company’s revenue is generated primarily by three sources: interest earned on customer cash balances, selling order information to high-frequency traders (a practice for which the SEC launched an investigation into the company in September 2020), and margin lending. As of 2021, Robinhood had 31 million users and 1.6 million people on its cryptocurrency wallet waitlist.

Who owns Robinhood?

Robinhood was founded in April 2013 by Vladimir Tenev and Baiju Bhatt, who had previously built high-frequency trading platforms for New York City financial institutions. The name derives from the company’s mission to “provide everyone, not just the wealthy, with access to the financial markets.” Tenev noted that while brokerages charged “fractions of a penny” to execute a trade, they typically charged $5 to $10 per trade and required account minimums ranging from $500 to $5,000.

The company debuted its app publicly for the first time at LA Hacks, then published it on the AppStore in December 2014 before officially launching it in March 2015. As of January 2015, 80 percent of the firm’s customers were “Millennials,” with an average customer age of 26. Fifty percent of users who have made a trade use the app daily, and 90 percent use it every week. Robinhood has 31 million users as of 2021.

Robinhood raised $110 million at a $1.3 billion valuation in April 2017, led by Yuri Milner of DST Global, Greenoaks Capital, and Thrive Capital. Robinhood closed a $363 million Series D financing round led by DST Global on May 10, 2018. Robinhood had raised a total of $539 million in venture capital funding as of May 2018, with the most recent valuation at $5.6 billion, an increase from their previous valuation of $1.3 billion.

In February 2018, the company announced that it would relocate its headquarters from Palo Alto to the former Sunset magazine headquarters in Menlo Park. In May 2019, Bloomberg and other news outlets reported on Robinhood’s pursuit of an additional $200 million in funding, which could value the company at $7 billion to $10 billion. Robinhood announced its expansion to the United Kingdom in November 2019.

Robinhood trading increased during the 2020 stock market crash. According to one study, the subsequent market rise was partly attributed to Robinhood traders, but Robinhood traders had a little daily impact on significant stocks. According to one study, In May 2020, Robinhood raised $280 million in venture funding from Sequoia Capital at a pre-money valuation of $8.3 billion. Three months later, the company announced a $200 million Series G funding round from a new investor, D1 Capital Partners.


FINRA fined Robinhood $57 million in late June 2021 and ordered it to pay $13 million in restitution to clients affected by outages and misleading communications in March 2020; this was the most significant FINRA penalty in the organization’s history.

On July 29, 2021, the company went public on the Nasdaq under the ticker HOOD. The opening price was $38, but it quickly dropped to a low of $33.35 before beginning to recover and reaching an all-time high of $85. Following that, it fell sharply again due to growing regulatory uncertainty, a drop in Q3 earnings, and the disclosure of a security breach affecting 7 million customers.

Who is Robinhood for?

With over 13 million users and an average age of 31, it is clear that Robinhood has positioned itself to be ideal for younger investors who want to get a piece of the action, even if it is in small amounts via fractional shares. The overall simplicity of Robinhood makes the app and website easy to use. If you want to try your hand at cryptocurrency investing, Robinhood can help. You will be able to trade Bitcoin, Ethereum, and other cryptocurrencies on their platform. Robinhood has also expanded its options trading platform, making the broker a viable option for options traders, though there are concerns about trade execution quality.


  • The Robinhood mobile app is straightforward to use. Even though the broker offers a web-based platform, it is a mobile-first company; This is a significant point of distinction between Robinhood and its competitors. The mobile app isn’t very robust. It has basic features. However, the platform is more than adequate for quickly moving from screen to screen and placing trades for investors who know exactly what they want.
  • Robinhood provides low-cost trading, access to fractional shares, and cryptocurrency offerings. Stocks, ETFs, options contracts, and cryptocurrency can all be traded for free. You can buy fractional shares on Robinhood for as little as $1. If you enable the dividend reinvestment program (DRIP) in your account, Robinhood will automatically reinvest any dividends earned from stocks or ETFs, assuming the positions support fractional share trading.
  • Robinhood offers excellent cash management and recurring investment features. The cash management features of Robinhood will allow you to earn. The annual percentage yield is 30%. You also don’t have to pay ATM fees at any of their 75,000+ ATMs. The recurring investment tool allows you to invest a fixed dollar amount once a month regularly.


  • Customers have few research or educational resources at their disposal when using Robinhood. If you want more than just stock quotes, you’ll need to sign up for Robinhood When compared to its competitors’ offerings, Robinhood lacks resources.
  • There are no mutual funds or fixed-income investment products available through Robinhood, and you will be unable to trade commodities, forex, or futures. Furthermore, Robinhood only accepts taxable brokerage accounts.
  • Robinhood lacks transparency when it comes to payment for order flow. Brokers typically publish a price for order flow statistics. It is the most effective method for comparing and ensuring investors’ accurate and timely trade executions. Robinhood fails to disclose this critical information to the public and thus loses points for lack of transparency.


Robinhood is straightforward to set up and use. Robinhood is an easy choice for investors who primarily use devices to manage their accounts, thanks to a mobile app with a clean design that focuses on the basics. You can also use the web-based platform, which looks and feels similar to the app. Both platforms support the same order types and asset classes.

When you first open the app, you’ll see a line chart that displays the value of your portfolio as well as your purchasing power. The main menu is located at the bottom of the screen, where you can easily use the search function to bring up a stock’s chart across multiple time frames.

You’ll see stock information such as highs and lows, market capitalization, and P/E ratio. Robinhood also offers a news feed, a ranking of analysts, and a company profile. When you’re ready to buy or sell, the trade button scrolls with the page, allowing you to place an order at any time.

Overall, the user experience with Robinhood is pleasant, and the app runs smoothly. One caveat is that it isn’t much you can do to personalize or customize the app to your preferred trading experience. There are no charting or in-depth research tools available in the mobile app.

During the late February and early March 2020 market surges, mobile apps and websites experienced significant outages. In a blog post, the founders stated that their systems could not handle the stress of the “unprecedented load,” and they promised to beef up their systems.

Trade experience

The trading experience on Robinhood’s web and mobile platforms is quick, easy, and efficient. Robinhood provides the functionality required for new investors to trade, but more experienced investors will notice that familiar tools are missing. Robinhood offers essential watch lists, stock quotes with charts and analyst ratings, recent news, and live streaming Bloomberg TV, all in addition to a simple trade entry process. Because there are no customizations on the web or mobile platform, you see what you get with Robinhood. You cannot set default order sizes, chart periods, or anything else.

Mobile trade experience

Robinhood is a mobile-first brokerage aimed at investors who want a straightforward trading app with no frills. The broker does not provide the same in-depth tools as more significant, more traditional brokers. You cannot trade directly from the chart, conditional orders are not supported, and you cannot enter multiple orders simultaneously or stage orders for later entry. However, you can use trailing stops and stop-limit orders.

The quote information on Robinhood is streamed in real-time, and you can stream real-time quotes on multiple devices simultaneously. “Recurring Investments” is a new feature that Robinhood has recently added. This feature allows you to schedule automatic investments for thousands of stocks and ETFs regularly, potentially assisting you in growing your investments for the future.

Range of offerings

Robinhood’s product offering is minimal, with only stocks, ETFs, options, and cryptocurrency trading available. Robinhood does not support mutual funds or fixed income products, and it does not allow you to trade commodities, forex, or futures. If you use Robinhood as your broker, you can invest in the following:

  • Stocks, long-only. No short selling.
  • 6900+ symbols can be bought or sold as fractional shares. The broker offers both stocks and ETFs.
  • Single and multi-leg options
  • Cryptocurrency: Bitcoin (BTC), Bitcoin Cash (BCH), Bitcoin SV (BSV), Dogecoin (DOGE), Ethereum (ETH), Ethereum Classic (ETC), Litecoin (LTC)
  • As mentioned, no mutual funds, no fixed income, futures, forex, and futures options.

Order types

Robinhood offers a limited number of order types. For the available assets, you can place market orders or limit orders. You will be unable to place conditional orders. This limited selection may not feel constrained to newer or experienced investors with simple tastes.

In terms of tax lot selection, the default cost basis selection for equities is first-in, first-out (FIFO). Contact Robinhood customer service to change the default cost-basis method for your account or specify different tax lots for liquidation.

Trading technology

Unlike many other brokers, Robinhood does not publish its trading statistics; it is difficult to compare its payment for order flow data to its competitors. How a broker routes your order determines whether you will receive the best possible price when your trade is placed. This best price is referred to as price improvement. Robinhood also does not publish its price improvement statistics.

Nonetheless, Robinhood has stated that their systems are designed to send your order to the market maker, most likely to give you the best price based on historical performance.

Because of this lack of transparency and recent events involving trading restrictions, investors may question whether Robinhood genuinely looks for the best pricing for customer trades. Robinhood does not allow you to automate a trading strategy or perform backtests in keeping with its simplified approach to investing.


Similar to most of its competitors, Robinhood does not charge trading fees. There are some other fees unrelated to trading that are listed below.

  • All equity trades (stocks and ETFs) are commission-free.
  • No fees for options trades
  • Margin trading requires a Robinhood Gold subscription at $5 per month, including $1,000 of margin. Margin usage above $1,000 charges 2.5% interest, which is relatively low.
  • There is a $75 account transfer
  • There are no domestic or international wire fees.
  • There are no account opening, account maintenance, or account inactivity fees.
  • Check fees: $20 to send a domestic check overnight.
  • The live broker fee is $25, though it is not obvious how to contact a broker.

How does Robinhood make money?

Robinhood operates as a single business segment and reports its financial results as such. However, it categorizes revenue into the following categories: transaction-based revenues, net interest revenues, and other revenues. Below, we’ll take a closer look at these revenue streams.

Transaction-based revenues

Robinhood earns transaction-based revenue by routing users’ orders for options, stocks, and cryptocurrencies to market makers, a practice known as payment for order flow (PFOF). Brokerage firms that use PFOF are compensated with a small fee for directing orders to a specific market maker. The cost is usually only a fraction of a penny per share, but it can be a significant source of revenue for businesses that deal with a high volume of orders. PFOF is one of the primary reasons Robinhood can offer zero-commission trading. In Q1 FY 2021, Robinhood’s transaction-based revenue increased 339.6 percent to $420.4 million, accounting for more than 80 percent of total revenue.

Net interest revenues

Robinhood earns net interest revenue (interest revenue minus interest expenses) on securities lending transactions. In addition, interest is earned on margin loans made to users, and interest expenses are incurred in connection with the company’s revolving credit facilities. Net interest revenue increased 160.2 percent to $62.5 million in Q1 FY 2021, accounting for approximately 12 percent of total revenue at Robinhood.

Other revenues

Robinhood’s other revenue sources are primarily membership fees for Robinhood Gold. Robinhood Gold is a paid subscription service that provides users with premium features such as enhanced instant deposit access, professional research, Nasdaq Level II market data, and margin investing access for approved users. Other sources of revenue include proxy rebates and various user fees. Revenue from these sources increased 396.5% to $39.2 million in Q1 FY 2021, accounting for nearly 8% of total revenue.

Portfolio analysis

In comparison to its larger competitors, Robinhood provides very little portfolio analysis. You can see real-time balances, margins, and purchasing power, but that’s it. The home screen displays a one-day graph of your portfolio value, and you can view specific dates and deals by clicking or tapping a different period at the bottom of the chart.

There is no asset allocation analysis, internal rate of return, or method for calculating the tax impact of a planned trade. There is no trading journal either. You’ll need to import your transactions into another program or website to perform any kind of portfolio analysis.


Robinhood’s education offerings aren’t as comprehensive as they should be for a broker whose ideal client is new to investing. Snacks, a podcast, newsletter, and video series that delivers the day’s top financial news stories to Robinhood customers every weekday, is now available. According to the broker, as of August 2020, more than 20 million people subscribed to the weekly newsletter and 2 million monthly active podcast listeners. Robinhood has recently introduced video as a new format for their Snacks content to provide exciting and valuable visuals to make financial news less intimidating.


Robinhood has also added a Learn section that provides financial information, definitions, and market explainers to help you understand financial terms and concepts. Since January 2020, Robinhood claims to have published over 650 articles on Learn and has seen a more than 250 percent increase in average unique daily visitors to their Learn pages.

Customer service

  • All customer service is handled via the app or website.
  • Robinhood is equipped with a chatbot.
  • Because there is no phone number, you cannot contact Robinhood for assistance. You can, however, enter your phone number for a callback. You can also contact the support team on social media as a customer.


  • The mobile app users can log in using face or fingerprint recognition and a custom pin.
  • Robinhood recommends that users enable two-factor authentication.
  • If two-factor authentication is not enabled, new logins from unidentified devices must also be validated with a six-digit code sent via text message or email.
  • Robinhood is a member of SIPC, which protects its members’ securities customers up to $500,000 (including $250,000 for cash claims). In contrast to other brokers, Robinhood does not carry excess Securities Investor Protection Corporation (SIPC) insurance.
  • Within the last four years, Robinhood has reported data breaches. The most recent occurred in 2020, affecting approximately 2000 customer accounts.


Robinhood was once a game-changing fintech player in the brokerage industry, assisting young investors in entering the market. The company’s motives are now being questioned, and the issues revolve around data, transparency, and trust. The SEC fined Robinhood $65 million in December 2020 for “misleading customers about revenue sources and failing to satisfy the duty of best execution.”

The SEC found that Robinhood failed to disclose to customers between 2015 and 2018 that its primary revenue source was derived from the market makers to whom it routed customer orders. This practice has resulted in trades that have netted customers less money than they would have received from other brokers. Given this, it’s not surprising that the broker doesn’t publish payment for order flow statistics.

Robinhood falsely claimed on its website that the quality of its execution was comparable to or better than that of its competitors. The SEC concluded that Robinhood’s lower trading prices cost investors on its platform $34.1 million.

In January 2021, Robinhood was thrust into the spotlight after it restricted access to securities such as GameStop, AMC Entertainment, Nokia, and others during the market frenzy surrounding the Reddit short squeeze on the stocks. One of Robinhood’s primary market makers, Citadel Clearing, owns a stake in the Melvin Capital hedge fund, one of GameStop’s most prominent short-sellers and other companies. Many people suspected a conflict of interest when the decision to limit customer buy orders for these stocks was made, prompting class action lawsuits and the attention of some members of Congress.


If you’re new to investing and have a small balance to begin with, Robinhood could be a good place to start. The mobile-first broker has an easy-to-use app and website that provides a smooth on-ramp to investing in stocks and ETFs.

Although Robinhood cannot customize the user experience, the app and website contain all the necessary information for a new investor. Robinhood’s recent controversies may have harmed its reputation among some of the younger investors it seeks. However, the company still offers commission-free stocks, ETFs, options, and cryptocurrencies, as well as a borderline addictive app to trade them on. Before deciding, new investors should consider the lack of transparency in payment for order flow and other issues.