The FinTech industry is one of the fastest-growing industries despite the effects of COVID-19 slowing down its momentum. One of the more recent successes to come out of the FinTech industry is Robinhood Markets, Inc. or simply known as Robinhood. The company was founded in 2013 and officially launched its mobile-app that allowed investors to invest in commission-free trades of stocks and exchange-traded funds in 2015. Since then, according to data presented by Buyshares.co.za Robinhood’s order flow revenue experienced a 514% YoY increase reaching $682M in 2020.
In 2014, before the app was even launched, an estimated 340,000 people signed up to the app’s wait list and a month before launch in March 2015, the app’s wait list was 700,000 names long. Since then, Robinhood has gone from strength-to-strength, and 2020 was their biggest year yet.
In 2020, Robinhood’s order flow revenue was recorded at $682M a 514% YoY increase from 2019’s revenue of $111M. Robinhood’s value also greatly increased in 2020 to $11.7B from $7B in 2019 – an increase of over 67%. This figure is projected to grow by 71% to $20B in 2021.
Robinhood’s user base also continues to grow after first crossing the 1 million user mark in 2016. Robinhood added 3 million users in 2020 taking their total number of users to 13M.
Robinhood helped take microinvesting mainstream
Before apps like Robinhood, investing in stocks usually involved some sort of fee or commission structure. The founders of Robinhood Vladimir Tenev and Baiju Bhatt helped build these investment systems for large financial institutions and saw the potential in the very market that felt was being excluded unnecessarily by investment vehicles.
In developing Robinhood, Tenev and Bhatt aimed to break down the barriers to entry and tap into a potentially rich market. When the app was launched Batt said: “We are not setting any account minimums, which we think unlocks a market of investors who couldn’t do this before. We see Robinhood as unlocking the microinvestor market.”
Robinhood caught in crossfire of GameStop’s now infamous short squeeze
The app received more national attention recently when it got involved in the recent GameStop short-squeeze that caused hedge funds billions of dollars in losses. A short squeeze occurs when a stock or asset’s value increases significantly in a short period of time, forcing investors that took short positions to buy back their shares at much higher prices.
Robinhood was criticized for its position to suspend trading on GameStop for a few days which caused a backlash among its user base and beyond. Critics saw the once champion of the small investor siding and defending large wall street hedge funds. Despite this recent controversy, Robinhood looks set to continue its rise in the FinTech world.