According to Robinhood, users of its new card, which will be offered by a new subsidiary of the company, Robinhood Money, can round up their change to the nearest dollar and invest this sum in assets of their choice. Robinhood will also reward users of this new feature with a weekly bonus, the company has said. 

Other consumer finance apps, such as Chime, already allow spare change investing. This is a feature proven to be popular with younger consumers in particular.  

The new card will allow users separate accounts for investing and spending and will come to replace Robinhood’s existing cash management product. Customers will have the option to receive cheques up to two days in advance via direct deposit. If users wish to do so, they can also choose to automatically invest a portion of their cheques.  

Robinhood has said that these new features will all be offered to users free of charge.

There is also an influx of investment apps. As a digital generation, it's hard to tell the genuine ones from the ingenuine ones. Fortunately, many online trading platforms act as brokers, guiding you through flexible interfaces in a beginner-friendly mode. The list compiled in this article shows the best software packages and trading apps that you can use to make investments without paying any commission.

If you are a beginner, these apps aim at giving you a good user experience so that you can focus on creating and nurturing your wealth on a long-term basis. This requires you to channel your money in index funds of low costs, held for a relatively long period to generate a substantial yield.

1. SoFi Invest

This app has gained popularity due to its variety of investment options. It offers a chance to place your money in cryptocurrency, ETF trades, and stock.

SoFi Invest creates a conducive space for personal finance, with free cryptos, ETFs, and stocks trades. However, the platform lacks options for mutual funds or trading funds. You can decide to be an active trader or dormant investor and let Robo-advisors and other automated tools perform the task. It is a suitable platform to create an account and select the investment option you prefer.

Pros

• It does not charge commissions or fees for you to trade.
• It has no minimum amount restrictions.
• You can invest in fractional shares, also called Stock Bits.
• There are vast choices on what you can trade or invest in.
• The app has automated tools for passive investments.

Cons

• It doesn't offer tax-loss opportunities, an investment approach that gives you tax benefits after selling a mutual fund or stock at a loss.
• It's not available to investors outside the US.

2. Webull

Webull is a commission-free trading app, offering you investment options on cryptocurrencies, ETFs and stocks. You can invest any amount of money from your savings or seek guaranteed instalment loans for bad credit direct lenders only.

This comes in handy if your credit score does not qualify you for loans from other financial institutions.  This user-friendly application is accessible from your desktop, tablet, or smartphone. It enables you to access trading analysis through powerful tools to make your trading experience smooth.

The research done using these tools helps you make more informed decisions on what to invest in and the right time to do it. Another reason for this app's popularity is that it doesn't place a compulsory minimum amount for your account. You can also take advantage of the occasional promotional free stocks to de-risk your account.

Pros

• It has trading tools, powerful enough for in-depth analysis.
• The app doesn't require a minimum amount.
• User-friendly site.
• The application process is fast.

Cons

• Webull partners with the Apex Crypto account for cryptocurrency trading, a platform that's not registered under FINRA or any broker-dealer association. This leaves your cryptocurrency investments uninsured under SIPC or FDIC.
• Newer users may take time before learning how to navigate the site.

3. Public.com

This app helps you invest in ETF trades and stocks on a commission-free basis. Its main target is the Gen-Z and Millennials who spend time on social media and would like to join the stock market investments.After abandoning the Payment for Order Flow monetisation programme, the app uses the "tipping" system and other revenue streams. 

Pros

• It doesn't charge any commission for investors to trade their ETFs or stocks.
• It has a social feed for users to interact and discuss investment trends, companies worth investing in, and those that aren't worth it.
• You can buy stocks or ETFs and gain values and interests.

Cons

• Its investment options are limited.
• It lacks analysis or research tools to guide your investment decisions.

4. Robinhood

Robinhood investment was the market pacesetter for zero-commission trading. It influenced other platforms to adopt the trend to keep up with the competition. You can trade ETF, cryptocurrency, options trading, and stocks without charges. However, the desktop site or mobile app restricts mutual funds trading.

The site has a user-friendly design suitable for you as a beginner. It does not take long to learn the system, enabling you to gain returns seamlessly. Additionally, the platform does not set a minimum amount requirement for its users.

Pros

• You can invest any amount since there are no minimum requirements.
• It offers you various trading options and tokens to choose from.
• It's the pioneer of the zero-commission trading practice.

Cons

• The platform is controversial as users engage in risky trades beyond their understanding.
• It does not support the trading of mutual funds.

5. Stash

Stash is another trading and investment app to consider when planning to place your money in an all-around financial site. It is user-friendly, and it offers low-cost services to its users.

This platform is primarily designed for passive income generation using automated tools, though you can use a hands-on approach to choose the stocks you prefer to trade. The returns accumulate in your account, which you can spend or maintain for further trades. Young investors below 18 years old can create custodial accounts with the help of their guardians, making long-term investments for compounded returns.

Unlike other applications on this list, Stash charges a monthly fee due to the personal-finance services offered on a full-time basis. However, you don't need to have a minimum amount in your account or pay commission to trade on the app.

Pros

• It simplifies your investment decisions with a commendable user experience.
• It is easy to navigate and trade on.
• The platform supports custodial investments for young investors below 18 years.

Cons

• You'll have to pay a monthly fee to enjoy the personal finance services offered on Stash.

Conclusion

Making investment decisions for beginners can be challenging and confusing, given the vast array of unclear details. In-depth research is recommended before you invest in any site: this will help you evade common risks and mistakes that can cost you money.

Robinhood reported a net loss of $423 million, or $0.49 per share, in the three months ending in December 2021. A year earlier, before its IPO, the company had posted a net income of $7 million or $0.01 per share.

Following the news of the results, shares of Robinhood dropped by as much as 15% to $9.98 in extended trading. 

Robinhood, in its third set of results as a public company, posted total revenue of $363 million for the fourth quarter of 2021, compared to $318 a year earlier. According to IBES data from Refinitiv, analysts had been expecting revenue of $362.14 million. 

During the fourth quarter of 2021, Robinhood’s costs rose 163% from the previous year, contributing to its $423 million net loss.

Robinhood, like many other tech start-ups, is yet to turn a profit following its IPO in July 2021. While its revenue was a positive sign, the company saw its monthly active users drop by 8% from the previous quarter to 17.3 million.

Here’s a representative quote from Mr Tenev’s piece:

“One wonders whether the push to ban payment for order flow and overregulate modern design is about investor protection or really about control.”

Actually, that’s one of the milder quotes. Elsewhere he calls his critics “market gadflies, academics and out-of-touch investors.” 

The OpEd continues Tenev’s long tradition of using obfuscation and deflection to avoid discussing any difficult questions posed by Robinhood’s “free” brokerage model. Indeed, the very title of the piece “Robinhood’s Users Come Under Attack” tells you right out of the gate that Mr Tenev isn’t here to dialogue with critics but rather to belittle them and deflect their criticisms.

This should come as no surprise to those who have followed Robinhood for any length of time. They have been hiding behind their users for years now, including recently paying a $65 million fine to settle charges with the SEC for “Misleading Customers About Revenue Sources and Failing to Satisfy Duty of Best Execution.”

Robinhood is the Facebook of eBrokers today. Like Facebook, they have built a user-as-product revenue model where they provide “free” services to their users while leveraging user data to get paid by their actual customers. In the case of Facebook, the real customers of Facebook are the advertisers. In the case of Robinhood, the real customers are the wholesale market makers that pay Robinhood for the privilege of executing user trades. This practice is known as payment-for-order-flow (PFOF). Like Facebook, Robinhood has a built-in conflict of interest with its users when it comes to its business model.

We’ve all gotten a look behind the curtain at Facebook recently thanks to whistleblower Frances Haugen. We know that Facebook prioritises “engagement” and “stickiness” even at the expense of mental health. Facebook is rewarded when its advertisers make more money selling stuff to Facebook’s users. Facebook does not make more money for improving the mental health of teenage girls. We’ve seen what happens when push comes to shove, and we’ve seen that Facebook knows what is happening and has been unwilling to make needed changes that would impair Facebook’s present and future profits.

Robinhood makes money when its users buy and sell more frequently because it gets paid PFOF by wholesale market makers when its users make a trade. No trades, no pay. Robinhood won’t disclose exactly the terms of how it is paid by wholesale market makers, but they do acknowledge that they earn a “percentage of the bid-ask spread.” So, what exactly does this tell us? It tells us two things:

1. Robinhood makes more money when buying and selling happens more frequently; and
2. It makes more money when the bid-ask spread is bigger, which means that they make more money when the trading happens in illiquid securities.

These are the indisputable financial incentives of Robinhood as a business. These are its profit motives. These are the incentives that drove massive revenues for Robinhood during, for example, the GameStop (1Q21) and Dogecoin (2Q21) trading frenzies. Mr Tenev has attempted to portray Robinhood as a victim in the GameStop frenzy (as he has again done in his WSJ OpEd) but no single event in 2021 did more for Robinhood’s market value than the GameStop trade.

The data strongly suggests that Robinhood is getting paid more per trade than any other broker.

Mr Tenev regularly argues that “brokerage firms have used this practice for decades” and that this is nothing new. That is true as far as it goes, but no brokerage firm has ever used it at the scale and efficiency of Robinhood. Moreover, what Robinhood has not told us is what percentage of the bid-ask spread Robinhood takes. The data strongly suggests that Robinhood is getting paid more per trade than any other broker. Here is how Piper-Sandler Managing Director Richard Repetto, CFA put it in a recent industry note on 2Q 2021 retail PFOF.

“HOOD earned the highest average rate among the large eBrokers on both equities and options in 2Q21. Innovation in charging for PFOF enabled HOOD to earn the highest average rate per share on both equities ($0.0023) and options ($0.0060) in 2Q21. We suspect that the elevated average rate earned is driven by (1) more profitable order flow, (2) execution quality and (3) payment methodology (charging a fixed rate per spread on equities rather than fixed rate per share). HOOD is the only eBroker to charge a fixed rate per spread on equities.”

A cursory glance at Robinhood’s most recent quarterly report (2Q 2021) informs us that 80% of Robinhood’s 2Q21 revenues came from “transaction-based revenues.” Cryptocurrency transactions accounted for 51.6% of these transaction revenues, options made up 36.6%, and equities only 11.5%.

In Mr Tenev’s WSJ OpEd, he decries his critics who “insist that our platform is gamified.” With classic rhetorical deflection, he never answers the question as to whether or not the platform is actually gamified but instead asks: “Investing isn’t a game, but must it be grim and difficult to understand?”

If Mr Tenev truly wants to address the concerns of Robinhood’s critics, then there is a very simple way that he can do so. Show us the data.

Show us how Robinhood chooses which “lists of stocks and exchange-traded funds that help people discover investments and notifications about stock movements that help them to stay informed.” Show us how Robinhood decides what cryptos and options they put in front of users. Show us what percentage of the bid-ask spread Robinhood gets paid for its payment for order flow (PFOF) on equities, options, and crypto.

If Mr Tenev truly wants to address the concerns of Robinhood’s critics, then there is a very simple way that he can do so. Show us the data.

Given what we know about Robinhood’s profit incentives, should we trust Robinhood to decide what “lists” and “notifications” to put in front of us? Should we trust Facebook to decide what content to put in front of our teenage daughters?

The answer is clearly no – and no amount of smooth PR deflection should suffice to keep us from seeking answers to such important questions. Robinhood’s own statements and filings show beyond a shadow of a doubt that Robinhood is driving its users into the most speculative areas of the markets. All we know for a fact is that this is extremely profitable for Robinhood.

It’s often said today that “data is the new oil.” It is true. Companies like Facebook and Robinhood that pursue the user-as-product business model are not what they appear to be. They are, in truth, digital resource extraction businesses. They extract data, refine it, and sell the “digital oil” to their actual paying customers (advertisers and market makers). They use user data to nudge their users towards the behaviours that benefit their paying customers.

In exchange for trusting such companies with massive amounts of our data, we should demand that they be transparent about how they are using this data to nudge customer behaviour.

If they won’t be more transparent, then there is only one other option: stop using their platforms.

Robinhood’s third quarter revenue jumped 35% to $364.9 million compared with $270 million in the third quarter of 2020. However, the trading platform still missed Wall Street estimates of $423.9 million. 

Average Revenues Per User (ARPU) was down 36% to $65, compared with $102 in the third quarter of 2020. Robinhood’s annual revenue forecast of almost $1.8 billion missed Wall Street estimates of $2.03 billion. Following the results, Robinhood shares sank by around 8%. 

The company says crypto activity "declined from record highs in the prior quarter, leading to considerably fewer new funded accounts, a slight decline in Net Cumulative Funded Accounts, and lower revenue in the third quarter of 2021 compared with the second quarter of 2021."

Robinhood had been previously warned of “season headwinds” as the industry moved into the second half of the year, which could lead to lower revenues and significantly fewer new funded accounts.

 In this article, we’re going to take a close look at the rise of Canadian trading apps and see how they can help you grow your portfolio and free yourself from wage tyranny.

Paychecks? 

I’ll let you in on a life-changing secret, the kind that they never teach you at school. No matter what job you get (with very few exceptions), you will never get rich whilst working for a paycheck. No never. Seriously, I know high profile corporate lawyers who were quickly left ruined and living in basements after a nasty divorce or simply after losing a lucrative job. If you really want to get out of the rat race, be comfortable and never worry about paying the gas bill again, then you absolutely need to diversify your income streams.

The more sources of money you have coming in, the safer you are. Without a doubt, the best way to do this is by trading stocks and shares. But it all sounds a bit complicated, right? It can be, but thanks to technological innovations and a whole plethora of cutting edge trading apps, it's getting easier than ever.

Buy! Buy! Sell! Sell!

When most of us visualise the stock market, we think of frenzied trading floors, giant screens showing who is up and who is down, ringing telephones and cries of “buy, buy! Sell! Sell!”.  If it sounds stressful, it's because it is. Corporate burnout in the Wall Street stock exchange is at pandemic levels. But it does not need to be like this. Remember that the whole point of the stock market is that it is open to everybody including you. Whether you are Warren Buffet looking to invest $10 million of loose change, or a humble bartender looking for someplace to invest $100 in tips, you can now get a piece of the stock market from the comfort of your own pocket.

Stock Trading Apps

Stock Trading Apps are smart/iPhone apps that allow you to watch, monitor, study and take part in the Stock Trade market in real-time. You simply install the app on your phone, set up your account, fund it, and off you go. You can buy and sell stocks and shares, you can trade and you can cash out at any time you like.

The rise in Stock Trading Mobile apps has been both meteoric and absolutely inevitable. The appeal of a stock trading phone app is obvious. Whereas once upon a time you needed a desk, multiple computer screens, a set of braces and possibly a casual cocaine habit to get on the stock market, now all you need is a phone - the stock market is now accessible for everybody. This means participants can trade in an environment, and in a way in which they feel comfortable. Best of all, they can do it in their spare time whether that's sitting on the train home from work, waiting for a coffee, or sneaking a quick toilet break (imagine coming back from the bathroom $100k richer than when you went in eh?).

A lot of apps have also aimed themselves as user friendly such as allowing “practice runs”  where basically you can play the real stock market using “monopoly” money until you get a feel for it. Other investment apps like e-Toro, allows you to simply “mimic” top traders - if they make a trade, so do you (albeit with a smaller amount) so you don’t have to do any of the hard work or thinking yourself.

But what are the implications of this?

Well, the opening up of the stock market to the masses has caused some notable consequences. Some commentators have even suggested that the 2020 Wall Market bubble that seemed to ignore the financial crisis caused by the COVID pandemic, was partially a result of furloughed workers sitting at home spending their time and money investing in the stock market! Cynics (and dare I say snobs) have even alleged that these “amateur” participants are dangerously meddling in the sanctity of the market.

A high profile consequence was the Gamestop debacle which made global headlines. To recall, a Reddit based community of DIY stock app aficionados using the Robinhood Trading App collectively decided to invest in the (previously underperforming) Gamestop Company sending the share price skyrocketing in a bubble that was sure to burst. This prompted the Wall Street regulator to step in and sanction the Robinhood platform on the grounds that it had facilitated market manipulation and forced Robinhood to apologise and revisit its business model. Of course, the counterargument is that this kind of “manipulation” is exactly what professional Wall Street traders have been doing every day for the last 100 years with no reprimand.

Apps like Robinhood, have also seriously dented the earnings of Stock Brokers and Financial Advisors as more and more of their clients realise that they no longer need to pay a middleman. This is serious business. According to the Financial Times, retail trading including mobile trading (that's ordinary folk with extraordinary phones) now accounts for as much stock market trading as mutual funds and hedge funds combined.

Regulatory Realities

In theory, the internet exists outside of geography and cyberspace knows no borders. But in practice, financial markets around the world are tightly regulated. Every platform has to be registered in somebody's jurisdiction and abide by their market rules and every user, (wherever they are based) is also subject to the financial regulations of whichever country their bank account or credit is registered in. For this reason, DIY investors in Iran will find they are locked out of trading apps as their country is totally and completely financially blacklisted. On the other hand, citizens of the US, the EU and the UK will find that their financial services friendly governments have made it insanely easy for them to get involved with few questions asked. As long as you can prove how you are funding your account, and personally undertake to declare any earnings for tax purposes, you can get trading on investing apps in minutes. Whilst the Canadian financial services authority is not quite as open as those in the UK and the US, they are still liberal enough to allow pretty much anybody to get involved with minimal hassle.

The Best Trading Apps In Canada

As promised, we are going to take a quick look at some of the best trading apps in Canada.

 Wealthsimple Trade

Wealtsimple trade has proven itself as Canada’s favourite trading app. You can open an account with $0 (though you will need to fund it to trade) and they charge a $0 commission on trades. Typically users can expect to save $9.99 per trade compared to brokerages and the app interface is quite easy to use once you have gotten to grips with it.

Questrade

Questrade bills itself as being for the “experienced and the beginner alike” but the $1000 minimum deposit says otherwise. Still, their commissions range from $4.99 - $9.99 so they are competitive and they do offer a range to a whole load of corporate stocks.

Qtrade

Qtrade is popular with credit unions. They are not quite as established as Wealthsimpe and their fees are a bit higher. They also sting you with a $25 quarterly “maintenance” fee (i.e. account rent) which is a big deal for small, dime and nickel traders. So why use them? Well, their customer support is excellent.

In August, news broke that PayPal was exploring the possibility of creating a stock trading platform. This marks a considerable inroad towards retail investment, having rolled out the ability for customers to trade cryptocurrencies last year. 

The company has even hired brokerage industry veteran Rich Hagen as part of the move - who has reportedly become CEO of a previously unreported division of PayPal called Invest at PayPal. 

Image by Nasdaq

As the chart above shows, PayPal’s potential foray into the world of retail investing may have been sparked by significant growth in the user base of online brokerages throughout 2020. While the pandemic may have aided new customers in making their first trades through stimulus packages and the free time afforded by social isolation measures, it’s also worth noting that brokerages have become far more popular since adopting zero-commission payment for order flow operating models. 

So far, 2021 appears to be telling a similar story in terms of mass retail investor growth around the world, and experts believe that PayPal is eager to tap into this rise in adoption. 

“The surge in retail investing, as well as the knowledge that more than 10 million new investors entered the market in the first half of 2021, are driving PayPal's interest in this industry,” explains Maxim Manturov, head of investment research at Freedom Finance Europe. “PayPal wants to ride this wave while also keeping up with the competition. Since then, Robinhood Markets, Inc. has grown to over 22.5 million net accounts by the conclusion of the second quarter of the 2021 fiscal year, an increase of 129.6% year over year.

Meanwhile, Square, Inc., PayPal's main competitor in the payment processing sector, has already incorporated features to its Cash App payment service that make it easier to trade equities and cryptocurrencies. And this is a major milestone in the evolution of the PayPal ecosystem. PayPal is a well-known brand that handles 22% of all online transactions in the United States and has a high degree of consumer trust. These criteria indicate that if it enters the retail investment market, it will be rewarded with a more extensive user base.”

PayPal’s Industry Muscle

PayPal will be aiming to leverage its industry muscle to compete with established online brokerages like Robinhood. Today the payments giant is responsible for leveraging 22% of online transactions in the US, while also retaining a relatively high level of consumer trust along the way. 

Image by Insider

With such significantly high total payment volumes around the world, PayPal could feasibly enter the market as the largest brokerage on the planet, with some 400 million customers already in place worldwide. 

PayPal’s global reach may also help on its path to prominence, with the possibility of accessing markets that the likes of Robinhood haven’t yet accessed, due to Robinhood only being available for US-based customers at the time of writing. However, some market commentators have expressed their fears that, although PayPal boasts a significant global user base, it may be too late for a party that’s been building throughout 2020. 

Late To The Party? 

Despite its huge volume of users, PayPal may still run into trouble winning over retail investors for their new service - particularly in the US where Robinhood has already performed exceptionally well in months. 

In conversation with Motley Fool’s Industry Focus host Jason Moser, financial planner, Matthew Frankel expressed his bafflement that PayPal had taken so long to push forward with plans to launch their own online retail brokerage. 

“My other adjacent thought to that is, are they late to the party? Has everyone else already scooped up that? Stock trading exploded in the middle of 2020,” Frankel added, noting that in missing the pandemic investment gold rush, PayPal may find itself at a disadvantage in winning over users who may have already acquainted themselves with other brokerages. 

Image by CB Insights

As the data above shows, Robinhood’s monthly active users swelled to 20 million in the early months of 2021 - owing to the sheer volume of coverage that the platform received in the wake of the Gamestop short squeeze. The trading app has now become synonymous with meme stocks and although its reputation has taken knocks from many Wall Street stalwarts like Warren Buffett, it didn’t stop Robinhood from going public in the summer of 2021 and attaining a sizeable market cap of around $35 billion at the time of writing. 

However, PayPal is far longer in the tooth than Robinhood and the company’s market cap of $316 billion shows that it certainly has the resources to make a success of whatever new concentration it turns its hand to. Winning over Robinhood’s network of retail investors may be one thing, but PayPal certainly has the ability to mount enough of a campaign to woo new users. 

Regulatory Hurdles

However, a bigger hurdle may be lurking around the corner in the form of the regulatory boundaries that PayPal will need to navigate. If PayPal wants to create its own brokerage subsidiary, regulatory approval will need to take at least eight months to complete. The US Securities and Exchange Commission (SEC) has already made it clear that it’s concerned about the level of ‘gamification’ taking place in the retail investing market of late - and the arrival of new key players may compound those fears. 

Ultimately, the unease of the SEC may cause the required approvals to take longer, while the commission has also made it clear that it’s considering imposing a ban on the popular payment for order flow investing models that have helped to bolster the revenue of Robinhood and many other industry leaders. 

Should PayPal opt to create its own retail investing tool, it will be entering an industry that is perhaps at its most volatile stage. However, with an ever-growing base of active users, PayPal is aware that it’s tapping into an industry that’s become extremely popular in recent months. With the right navigation, the payment giants may be able to hurdle its uncertainty and make a big splash in the ever-popular retail investing landscape. 

Gensler told Barron’s that the payment for order flow — the backend payment that brokerages obtain for directing clients’ trades to market makers — has “an inherent conflict of interest”. 

For trading platform Robinhood, payment for order flow is one of its largest revenue sources. It is currently how the platform is able to provide zero-commission trading. Yet, payment for order flow is controversial and has amassed attention from Main Street and the Financial Industry Regulatory Authority. For several months now, Gensler had said that a ban on payment for order flow is an option that the regulator could look to introduce. As a possible alternative, the SEC has said it would also consider better defined and more rigorous brokerage disclosures.

In January, Robinhood was forced to limit trading on certain securities after a short squeeze in GameStop’s stock. This saw Robinhood’s CEO Vlad Tenev testify to the US House Financial Services Committee in February. Legislators condemned payment for order flow for the conflict it has with market makers. 

However, Robinhood has previously said that it believes payment for order flow is a better deal for its customers in comparison to the old commission structure. The trading platform says that if the payment for order flow model changed, the brokerage and the wider industry would be capable of adapting. 

GameStop jumped by as much as 36.5% to $225 apiece in heavy trading volume. According to FactSet, over 14 million shares changed hands, a figure that is seven times more than its 30-day average. 

Shares of AMC Entertainment were also up. The US cinema chain saw a 20.3% increase and, according to the broker’s website, was the most active stock on Fidelity’s trading platform as of 2:30pm ET. Domestic merchandise retailer Bed Bath & Beyond rose by 4%, whilst Clover Health jumped almost 10%. Robinhood advanced 9% without any apparent news.

However, with most investors awaiting Thursday and Friday’s key Federal Reserve summit, the rest of the stock market appeared subdued. The S&P 500 closed Tuesday’s session 0.2% higher. 

According to FactSet, overall volume was light on Tuesday with the SPDR S&P ETF trading 30 million shares. 

However, Robinhood shares dropped by more than 8% in after-hours trading as the company warned that a slowdown in trading activity would impact revenues in the current quarter. It is also possible that the platform’s investors are apprehensive about whether crypto, renowned for its volatility, can continue to provide financial success for the company. 

Robinhood’s revenue surged by over 131% in the period from $244 million a year ago, nearing the high range of the trading platform’s prediction of $546 million to $574 million. The company saw revenue from crypto trading reach $233 million, over half of all the transaction-based revenue of $451 million for the second quarter. In the first quarter, crypto’s share of revenue rose to over 51% from 17%. By contrast, the company’s crypto-based revenue sat at just $5 million In the second quarter of 2020. 

Robinhood introduced crypto trading in 2018. It has ballooned in the past few years, with the trading platform offering seven different digital coins, including bitcoin, litecoin, and ethereum. 

Before floating on the Nasdaq Stock Exchange on Thursday, Robinhood priced shares at the low end of the $38 to $42 range. The trading platform sold 52.4 million shares, generating a profit of just under $2 billion. The company’s co-founders Vlad Tenev and Baiju Bhatt each sold around $50 million worth of stock.

Robinhood, which claims its mission is to “democratise” investing, has become a central gateway to the markets for first-time, and often young, investors. The trading platform offers equity, cryptocurrency and options trading, and cash management accounts. During the pandemic and the meme stock craze, the platform saw record trading levels. 

Robinhood has an estimated 22.5 million funded accounts as of the second quarter of the year. In the first quarter of 2021, this figure stood at 18 million. The trading platform was last valued in September in the private markets at £11.7 billion. This latest valuation, following its IPO, marks a significant milestone for the company. 

In its updated prospectus, Robinhood estimated revenue of $546 million to $574 million in the second quarter, a substantial increase from $244 million in the second quarter of 2020. Revenue soared 309% in the first quarter to $522 million, up from $128 million the year before. 

Image by Andrew Neel from Pexels

On Monday, the trading platform revealed the details of its initial public offering in a stock market filing, preparing investors for one of the most highly anticipated IPOs of the year. The flotation follows a huge increase in young people signing up to the platform and beginning to trade shares throughout the covid-19 pandemic. The shares are expected to be priced at $38 to $42, the platform has said. 

Robinhood, which claims its mission is to “democratise” investing, is a highly controversial platform. It was recently criticised for curbing trading in the middle of the surge in GameStop shares as it struggled to keep up with demand, and, in February, the company was sued following the suicide of a 20-year-old trader. 

If Robinhood achieves its $35 billion valuation target, then the IPO will mark a threefold increase since September 2020 when the platform was valued at $11.7 billion. The company is estimated to have 22.5 million funded accounts, up from 18 million in the first quarter of this year, and expects to see second-quarter revenue for the year sit between $546 million and $574 million. This would be a 129% increase from the same period last year.