Robinhood was founded in April 2013 by a pair of tech entrepreneurs who wanted to build a trading platform on the premise of “providing everyone with access to the financial markets – not just the wealthy." The first version of the Robinhood app was released in March 2015, and from there, the company grew exponentially. It hit the 22 million users mark in 2022 and reached a valuation of over $8 billion in the process.
Unfortunately, Robinhood has constantly found itself in the midst of various financial scandals. It was fined over $130 million for service outages and misleading communications that affected users and Robinhood has lost considerable customer goodwill after being accused of “payment for order flow” data sales to Wall Street at the expense of retail traders – a development that starkly contrasted to the platform’s claimed position as a provider of trading services for “the little guy.”
Robinhood offers a number of high-performance stock, crypto, and banking services to its retail and corporate customers.
Stock and ETF Trading
Robinhood currently supports spot and options trades for U.S. exchange-listed stocks and ETFs as well as American Depositary Receipts (ADRs) for over 650 globally listed companies.
Commission-free trading of stocks and ETFs was Robinhood’s first-ever product. Instant deposits were offered soon after, followed by instant deposits, margin trading, market analytics, and options trading. The platform normally supports stocks and ETFs that are listed on the Nasdaq and New York Stock Exchange.
While you can track many cryptocurrencies on Robinhood, the platform currently supports trade in only 13 different tokens. These are BTC, ETH, SOL, DOGE, SHIB, MATIC, LTC, BCH, ETC, BSV, COMP, LINK, and UNI. Customers can place market and limit orders for these tokens. Margin trading is not currently supported for cryptocurrencies.
Robinhood more recently forayed into banking services, starting with a new Cash Management feature within the app that provides an annual interest rate of 1.8%. The Robinhood Cash Card – a debit card that allows users to automatically invest in assets such as stocks and crypto when spending money – was also recently introduced.
In addition to the above, Robinhood continues to innovate and has recently released a slew of new products and services. These include a web3 wallet, stock lending services, crypto gifts, free stocks on sign-up, and the opportunity to buy stocks at their IPO prices.
Robinhood charges zero fees on cryptocurrency trades. Its brokerage accounts are also free and there are no commissions or fees for opening, maintaining, or funding accounts. Robinhood also levies Trading Activity Fees of $0.000130 per share for stock/equity sells and $0.00218 per contract/options sells, up to a maximum of $6.49, which are mandated by the government and do not go to Robinhood.
Finally, ADRs come with fees of between one and three cents per share. These are charges that are levied by the banks that issue these certificates and not Robinhood.
Is Robinhood Safe?
Robinhood uses the 2FA, password encryption, and KYC processes commonly seen in the online financial services space to protect users, their accounts, and their funds. Robinhood, as a member of the Securities Investor Protection Corporation (SIPC), protects securities customers of its members up to $500,000 as well, including up to $250,000 in coverage for cash claims.
In terms of compliance, Robinhood has suffered serious operational revenue and user goodwill setbacks when a number of “short squeeze” events, user lockouts, and platform outages were deemed to have harmed users, events for which Robinhood was fined hundreds of millions of dollars.
Also, Robinhood made a considerable amount of negative press when it was discovered that it was selling retail customer data to larger financial corporations, a practice known as “payment for order flow.” This allowed the large corporations to benefit from insider knowledge of the trades that retail/private users were making – at the expense of those smaller players.
In addition to its web platform, Robinhood also supports a mobile app that is available on both iOS and Android devices. The application offers the same functionality and UI as its web counterpart.
The Robinhood app is currently rated 3.8 stars from 450K reviews on the Google Play store with most users complaining about the app not properly functioning. However, on the Apple app store it is rated 4.2 Stars from 4M reviews which is considerably higher than the Google Play store. On the app store reviews, there are hardly any complaints about the usability of the app.
Robinhood’s customer support team can be reached via email and a safe and friendly in-app request-to-call service that works around the clock. Support via social media platforms are also available on Robinhood’s official accounts on Twitter (@AskRobinhood, @RobinhoodApp, @RobinhoodSnacks), Facebook, Instagram, LinkedIn, YouTube, TikTok, Reddit, and the Robinhood Blog.
Since the platform is geared toward retail users, digestible financial news (called Robinhood Snacks) and a rich library of educational finance and investing articles (called Robinhood Learn) are also offered and are big parts of Robinhood’s services in the areas of user education and awareness.
Has Robinhood been successful in onboarding millions of users – primarily Millennials – to the financial services space and rolling out many fast, performant, zero-cost, and user-friendly trading and investing products and services? Absolutely.
Unfortunately, what has been epic progress in an otherwise traditional and gated industry has been somewhat overshadowed by the scandals and breaches of trust that have rocked Robinhood and negatively impacted its users over the last several years.
Robinhood undoubtedly makes it easy to get started with trading and investing in stocks and cryptocurrencies, but if it does it at the expense of your data, then you are better off taking your business elsewhere.