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Robinhood Markets Company profile

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Robinhood Markets, Inc. (HOOD) is an American financial services company based in Menlo Park, California. It is a Financial Industry Regulatory Authority (FINRA)-regulated broker-dealer registered with the US Securities and Exchange Commission (SEC), and a member of the Securities Investor Protection Corporation (SIPC). The company’s mobile application, Robinhood, offers investors access to commission-free trading of stocks, exchange-traded funds (ETFs), options and cryptocurrencies. In addition, it has recently added cash-management services to its list of products. 

The company was founded in 2013 by Vlad Tenev and Baiju Bhatt, and the app was officially launched in March 2015. Robinhood has been credited with lowering the barriers to stock trading and, in particular, encouraging younger, first-time investors to explore the stock market. In the second quarter of 2021, the company had around 22.5 million users and more than $100bn in customer assets.

As the broker doesn’t charge commission on trades, its income is generated through three main sources: margin lending, interest on customers’ cash balances and the selling of order information to high-frequency traders. In September 2020, the SEC opened an investigation over the company’s deals with high-speed traders. 

Throughout the years, the company has been caught in a series of controversies, such as the payment for order flow (PFOF) issue in 2018 and a security breach by cyber criminals in 2020. During the infamous short squeeze on GameStop (GME) in early 2021, Robinhood was widely criticised by lawmakers, regulators and celebrities for freezing trades for GME stock on 28 January. 

And, on 30 June, it also received the largest-ever FINRA fine – approximately $70m – for “significant harm suffered by customers, including millions of customers who received false or misleading information from the firm, millions of customers affected by the firm’s systems outages in March 2020 and thousands of customers the firm approved to trade options even when it was not appropriate for the customers to do so.”

The company reported a loss of $1.4bn in the first quarter of 2021, which was largely related to the fund-raising losses incurred during January’s GameStop trading frenzy. In the quarter, it made $522m in revenue, 309% higher from the $128m figure a year earlier. In 2020, Robinhood generated $959m in net revenue and $7.45m in net income. In 2019, the business reported a revenue of $278m and a net loss of $107m.

Since 2017, Robinhood Markets has raised $5.6bn in a series of funding rounds, with the latest in February 2021. In its initial public offering (IPO) on 28 July 2021, the company sold 55 million shares priced $38 each, raising $2.1bn. Co-founders Tenev and Bhatt each sold about $50m worth of stock. JPMorgan Chase (JPM) and Goldman Sachs (GS) were leading the deal. 

The company debuted on the Nasdaq exchange with the opening price of $38 a share, giving the company an overall valuation of $31.8bn. Over 49 million shares were sold during the first 30 minutes of trading. On its first trading day, the Robinhood stock price reached an intraday high of $40.25 and intraday low of $33.35. Shares ended the session at $34.82, giving Robinhood a market capitalisation of about $29bn.

You can trace the ups and downs of the Robinhood share price with our comprehensive HOOD stock chart, and go long or short on the company’s shares with contracts for difference (CFDs) using Capital.com’s proprietary trading platform.