Robinhood, based in Menlo Park, California, offers commission-free trading of stocks, ETFs, and cryptocurrencies through a mobile app. It is regulated by FINRA and the SEC, with revenue streams from various sources. As of December 2023, Robinhood had millions of funded accounts and active users.
In response to accusations of profiteering from an unequal system, Vladimir Tenev and Baiju Bhatt were inspired to create Robinhood in 2012. The app aimed to level the playing field by offering commission-free trading, disrupting the traditional brokerage model.
Robinhood Markets, Inc. was established in April 2013 by Vladimir Tenev and Baiju Bhatt, who aimed to democratize access to financial markets by offering commission-free trades through a mobile app.
In 2014, Robinhood officially launched on Apple's App Store after building up a significant user base through a referral-based waiting list strategy. The app's commission-free trading model attracted a large number of users.
Robinhood officially launched its mobile app in March 2015, providing users with a platform for commission-free trading of stocks, ETFs, and cryptocurrencies.
In February 2016, Robinhood introduced instant deposits, allowing users to be credited instantly for deposits up to $1,000, which was a significant improvement from the previous three-day waiting period for funds to appear via ACH transfer.
In September 2016, Robinhood launched Robinhood Gold, a premium subscription plan that provided users with benefits such as up to $50,000 in instant deposits, margin trading, and enhanced market analytics.
As of February 2017, Robinhood had executed over $30 billion in trades, showcasing the platform's growing popularity and user activity in the stock market.
In August 2017, Robinhood started offering free stocks to users who referred new members to the platform, aiming to attract more users through a referral program.
In December 2017, Robinhood introduced options trading to its platform, expanding the range of investment opportunities available to its users.
On May 10, 2018, Robinhood concluded a $363 million Series D financing round with DST Global as the lead investor, bringing their total venture capital funding to $539 million.
After introducing a checking account with 3% interest, Robinhood faces backlash and is forced to retract the offer. It is revealed that the SIPC guarantee for user deposits was not accurate, leading to concerns about the company's banking practices.
Users of the Robinhood app uncover a loophole that allows for unlimited leverage in trades. A trader showcases leveraging a $1 million position with just a $4,000 deposit, raising questions about risk management and oversight within the platform.
On December 19, 2019, the Financial Industry Regulatory Authority (FINRA) imposed a $1.25 million fine on Robinhood for not ensuring customers received the best deal on their orders. Robinhood, a brokerage firm, failed to meet the requirement of best order execution and had to settle with FINRA.
On March 2, 2020, Robinhood experienced a platform outage during a highly volatile day in the equities market. Users were unable to trade or access funds for most of the trading hours, causing traders to miss out on potential profits as stock indices surged more than 4% throughout the day.
On March 4, 2020, Travis Taaffe, a Robinhood investor, files a class action lawsuit in the US District Court for the Middle District of Florida in Tampa. The lawsuit aims to recover damages due to Robinhood's alleged failure to provide and maintain a suitable platform for its users.
On March 9, 2020, Robinhood experienced another outage, rendering the platform partially or completely inaccessible from 6:30am to 12:30pm. This outage coincided with a significant drop in the Dow Jones Industrial Average, reminiscent of the 2008 financial crisis.
On March 26, 2020, Robinhood announced a compensation of $75 for traders who suffered losses due to the previous outages. Interestingly, the same amount of $75 was required by users to withdraw funds or transfer shares of stock.
A federal judge rejects a plea to halt Robinhood from contacting users about a $75 goodwill credit, citing lack of evidence of abusive communications by the company.
Vladimir Tenev and Baiju Bhatt, founders of Robinhood, created a stock trading app aiming to democratize finance by offering zero-commission trades. However, the primary revenue source was selling customer trades to market's notorious operators.
Robinhood faces a class action lawsuit in Miami-Dade District Court, accusing the app of not warning its inexperienced investors about potential stock value fluctuations.
The regulatory arm of the Massachusetts Securities Division filed a complaint against Robinhood, accusing the company of failing to protect customer assets and exposing them to unnecessary trading risks, including the 'gamification' of trading.
Robinhood paid $65 million to the SEC to settle charges related to making repeated misstatements about receiving payments from trading firms for routing customer orders and failing to seek the best terms for executing customer orders.
A class-action lawsuit was filed against Robinhood on January 28, 2021, in the Southern District of New York, alleging market manipulation by removing the stock 'GME' from its platform during a stock rise.
On January 29, 2021, Robinhood announced that it would reallow limited buys of the stocks that were previously restricted.
The House Committee on Financial Services questioned Robinhood CEO Vlad Tenev during a hearing on February 18, 2021, regarding the trading restrictions and controversy.
Robinhood disclosed in a regulatory filing that it is facing 46 class actions and three individual lawsuits due to the Gamestop controversy. Additionally, four class actions have been filed regarding Robinhood's trade order flow, which is a key revenue source for the company.
On June 30, 2021, Robinhood Financial LLC received a record $70 million penalty from Finra due to trading outages that resulted in financial losses for investors.
On July 29, 2021, Robinhood made its debut on the Nasdaq stock exchange under the ticker symbol HOOD, with an opening price of $38.
In March 2022, Robinhood announced an extension of four additional hours to its extended trading period, moving towards the goal of providing 24/7 equities trading for clients.
In April 2022, Robinhood rolled out a cryptocurrency wallet to over 2 million users, expanding its services to include storage and trading of digital assets.
In May 2022, Robinhood introduced a stock lending program, enabling users to lend out fully paid stocks in their portfolio, expanding the platform's financial services.
In August 2022, Robinhood's cryptocurrency division faced a $30 million penalty from the New York State Department of Financial Services for alleged violations of anti-money-laundering and cybersecurity regulations.
On May 1, 2023, Robinhood briefly labeled AMC stock with a bankruptcy tag for three minutes, leading to potential legal action from AMC's CEO Adam Aron.
On June 22, 2023, Robinhood announced the acquisition of X1, a credit card issuance startup, for $95 million, expanding its services into the credit card sector.