Robinhood Attracts $200 Million as Valuation Swells to $7 Billion: Report
ByCCN: Who says millennials don’t like to save and invest their money? By building a commission-free stock brokerage and trading app with a slick interface,Robinhoodhas built a $7 billion business in just six years. That’s the company’s valuation as it nears a $200 million funding round from its current financial backers,Bloomberg reports. The investment round is still unfolding and once complete could reportedly result in Robinhood fetching a valuation as high as $10 billion.
Robinhood closed its most recent funding round last year at which time a $5.6 billion valuation was attached.
The stock trading app boasts a stellar track record of growing its user base and monetizing its services.
According toNasdaq, Robinhood Markets Inc. made $8 billion in revenue in 2017 and is projected to rake in $47 billion annually by 2020. It is already the fastest growing broker of all time.
— Robinhood (@RobinhoodApp)May 23, 2019
How Does Robinhood Makes Its Money?
With no commission fees, a common question people have when they first hear about Robinhood is: ‘How does the app make money?’ It’s a fair question.
Robinhood’s profitscome fromthree sources:
- Interest earned by lending money held in Robinhood accounts
- Selling orders to high-volume exchanges seeking more liquidity
- Robinhood Gold subscriptions that charge users $10 to $200 a month to borrow anywhere from $2,000 to $50,000 to trade on margin
The sale of orders to high-frequency exchanges is a practice thathas attractedsome criticism for a lack of transparency.
— Nasdaq (@Nasdaq)May 23, 2019
Robinhood’s Merry Band of Millennials
Robinhood is very popular with millennials. The lack of commission fees is a big selling point for millennials, who have less cash to spare than their parents did when they were that age. The app’s friendly interface and slick design is also likely a draw for the young-ish crowd.
Millennials Also Love Cryptocurrency
There’s no doubt that the mobile app’s selection of cryptocurrency investments is also attractive to millennial savers and daytraders.
Robinhood Co-Founder and co-CEO Baiju Bhatttold CNBClast year:
“Crypto has certainly added to our growth. In the next couple of years I think you’ll see Robinhood looking like a full-service consumer finance company.”
About The Author
Grew up reading Isaac Asimov, J.R.R. Tolkien, The Bible, Ayn Rand, John Locke, and Robert Heinlein while listening to conservative talk radio, reading used economics textbooks, and reading through most mainstream political newspapers and magazines.
This article was edited byGerelyn Terzo.