![]() Robinhood's impressive growth has come with its challenges. Robinhood announced on May 20 that it is giving retail investors access to IPO shares, an area long exclusive to Wall Street banks and sophisticated investors. The millennial-favored stock trading app found itself in the middle of a firestorm in January amid the short squeeze in GameStop, which was partially fueled by Reddit-driven retail investors.Īt the height of GameStop's surge, Robinhood restricted trading of certain securities due to increased capital requirements from clearing houses. That surge has continued into 2021, marked by frenzied trading around so-called meme stocks. ![]() The app experienced record levels of new, younger traders entering the stock market during the pandemic. Robinhood - whose longstanding mission is to "democratize" investing - is seen as the main gateway for young investors to access the markets. "Because a majority of our revenue is transaction-based (including payment for order flow, or "PFOF"), reduced spreads in securities pricing, reduced levels of trading activity generally, changes in our business relationships with market makers and any new regulation of, or any bans on, PFOF and similar practices may result in reduced profitability, increased compliance costs and expanded potential for negative publicity," the S1 filing said. The stock trading company collected a record $331 million in payment for order flow – the money brokerage firms receive for directing clients' trades to market makers – in the first quarter of 2021, according to a regulatory filing with the SEC. ![]() The app makes the majority of its money from customer order flow and a premium paid service. Robinhood offers equity, cryptocurrency and options trading, as well as cash management accounts. The Menlo Park, California-based start-up pioneered free stock trading, forcing the entire industry to drop commissions in 2019. Now, the company has 2,100 full-time employees. Robinhood was founded in 2013 by now CEO Vlad Tenev and Baiju Bhatt. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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