Robinhood Markets, Inc. is an American financial services company headquartered in Menlo Park, California. The company offers a mobile app and website that offer people the ability to invest in stocks, ETFs, and options through Robinhood Financial and crypto trading through Robinhood Crypto. Robinhood operates a website and mobile apps for iPhone, Apple Watch, and Android. The company has no storefront branches and operates entirely online without fees.
Robinhood is a FINRA regulated broker-dealer, registered with the U.S. Securities and Exchange Commission, and is a member of the Securities Investor Protection Corporation. The company's main source of revenue comes from interest earned on customers' cash balances, selling order information to high-frequency traders (a practice for which SEC opened a probe into the company in September 2020) and margin lending. The company has 13 million users as of its most recent SEC filing.
Robinhood was founded in April 2013 by Vladimir Tenev and Baiju Bhatt, who had previously built high-frequency trading platforms for financial institutions in New York City. The company's name comes from its mission to "provide everyone with access to the financial markets, not just the wealthy". Tenev noted that executing a trade cost brokerages "fractions of a penny" but they typically charged fees of $5 to $10 per trade, as well as required account minimums of $500 to $5,000.
The app showcased publicly for the first time at LA Hacks, and was then officially launched in March 2015.
As of January 2015, 80% of the firm's customers belonged to the "Millennial" demographic and the average customer age was 26. Fifty percent of users who have made a trade use the app daily and 90% use the app weekly. By February 2018, Robinhood had 3 million user accounts, around the same number as the online broker E-Trade.
In April 2017, Robinhood raised $110 million at a $1.3 billion valuation led by Yuri Milner of DST Global, Greenoaks Capital, and Thrive Capital. On May 10, 2018, Robinhood closed a $363 million Series D financing round led by DST Global. As of May 2018, Robinhood raised a total of $539 million in venture capital funding, with the last valuation at $5.6 billion, up from their previous valuation of $1.3 billion. In May 2019, reports from Bloomberg and other outlets publicized Robinhood's pursuit of an additional $200 million in funding, which could value the company in the $7 billion to $10 billion range. In November 2019, Robinhood announced its expansion to the United Kingdom.
During the 2020 stock market crash, Robinhood trading increased. The subsequent market rise was partially attributed to Robinhood traders, but a study indicated that Robinhood traders had little daily impact on major shares.
In May 2020, it was announced that Robinhood had raised $280 million in venture funding at a pre-money valuation of $8.3 billion led by Sequoia Capital, and 3 months later, the company announced a $200 million Series G funding round from a new investor, D1 Capital Partners, on August 17.