Robinhood is an American app-based stock brokerage that offers commission-free trading. It was founded in Palo Alto in 2014 by two former Stanford roommates, Baiju Bhatt and Vlad Tenev. Robinhood is currently available in the U.S. and is accepting users to its waitlist for an upcoming launch in Australia, where fees for a single trade can run up $65 USD. The various fees attached to trading stocks often deters young people from entering the market, but by eliminating fees and streamlining the process, Robinhood hopes to open up trading to a new demographic. The tool is the fastest-growing brokerage in history, with hundreds of thousands of customers and more than $2 billion in transactions. In 2015 it raised $50 million in funding and won an Apple Design Award--the first finance app to do so. Now the company is letting developers build its functionality into already existing products like StockTwits and Quantopian, which could revolutionize trading. The company is eyeing international expansion and already has 20,000 people in Australia waiting to get in.
The company's competitive advantage in 2016:
It's free and mobile-first
A lower overhead cost with no branches or ads
Ahead of competitors with regulatory roadblocks
The biggest challenges standing in this company's way in 2016:
Incumbent stock brokerages
The need for a steady revenue stream
What to look out for:
There are more partnerships on the horizon, but Robinhood isn't talking about which companies will be involved.Beta testing a way for users to pay a trial rate of 3.5% to trade using margin, or money they're owed but that hasn't deposited in their accounts yet.The company plans to include educational tips and insights about investing.International expansion. It has 20,000 users wait-listed in Australia, where per-trade fees can reach over $50.
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