How Robinhood Captures Beginner Investors

Robinhood led the way for zero commission trading. It helped bring in a new generation of investors to the stock market. The Covid-19 pandemic and stay-at-home orders helped the trading app add 3 million users in the first quarter of 2020. “The Robinhood Trader” quickly became synonymous with retail trading. The company has made the stock market more accessible to millions of users but not without complications.

The beginning of 2020 created a unique moment for retail trading: Increased market volatility, stay-at-home orders, and zero commission fees across all trading platforms created a surge in activity and an increase in first-time traders.

These first-time traders, many in their 20s and 30s, found the stock market accessible. High prices had kept many on the sidelines for years. As sports events were canceled, sports betting was replaced with stock trading.

Stocks went to historic lows, and many young investors opened their Robinhood app. Robinhood has been the fintech darling of Silicon Valley, founded by Vladimir Tenev and Baiju Bhatt in 2013. The app has amassed 13 million user accounts and led the way for zero-commission fee trading. In no time, it has created brand awareness and popularity unlike that of the legacy brokerages such as Charles Schwab and Fidelity, or its app-first competitors like Webull and Dough.

Users download Robinhood for its simplicity and ability to start trading in a matter of seconds. For the first time, young investors felt they had the power to trade and make their own decisions on how to invest their money. The app came from Silicon Valley, not Wall Street, and its frictionless interface and ‘game-ified’ features quickly captured young, first-time stock traders.

In a Dec. 4, interview on CNBC’s “Mad Money,” Bhatt told Jim Cramer, “The thing that makes Robinhood really unique is that it’s incredibly efficient in the way that it operates because we’re from the ground up a technology company which allows us to build really modern systems that have our systems be much more automated much more stable by just having code execute.”

As a fintech leader and with such large growth, Robinhood has met lots of challenges. It’s battling the SEC, lawsuits, and growing competition from traditional Wall Street firms.

Watch the video above to find out how Robinhood plans to keep up with the demands of its users — and with the growing attention of regulators.

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How Robinhood Captures First Time Investors

[quartytypo]

Robinhood: Do you know anything about the stock market? Freshman investor: No. Robinhood: Good. We will start you with Options trading.

[nxlee]

1:46 "Investors" more like first-time "gamblers"

[gmnboss]

How can you mention Buffett and Day Trading in the same breath?

[stefanwolf]

These wannabe investors talking down on Warren Buffett is like a child that thinks that he just outsmarted his parents LOL! Just because you scored a nice 3-pointer that doesn't make you the 2nd coming of Kobe Bryant.

[pbassassinz]

Most stocks will go down but stonks will always go up.

[jurgenjurgen]

Short term trading = Gambling
Long term trading = Investing
🤷🏻‍♂️

[sanbetski]

This video is one big advertisement for robinhood app LOL!

[Jacktrading]

Bro who’s this guy calling buffet an idiot 😂😂

[clarkenationja]

Every time I watch these interviews I never see anyone taking responsibility and holding themselves accountable. Its always the company's fault.

[WristManagement]

If Robinhood had a customer support phone number...

[GoodKnightRob]

Although I don’t use Robinhood, I’m glad for the disruptions they made.

[twali]

Robinhood isn't going anywhere. They got the younger generation. Good luck to the other companies

[CoordinatedCarry]

Ah the stock market, socially acceptable gambling.

[kbtken]

Salute to Robinhood for bringing more suckers into the casino and guiding them to the high roller poker tables

[icywind]

I opened my account in march. I'm currently up 20% so far as of today.

[PiranhaJaw]

"it's easy, frictionless, and fun" we know what she likes

[andrewoh]

They're missing what is probably the biggest competitive advantage - the easy interface that isn't a mind boggling wtf

[DylanAlexander]

Buy quality companies that have been household names for decades at good prices consistently and hold for atleast 20 years.

[joshuadavila]

Love the Robinhood investors!! They push the price up as they chase the rabbit and make me some money!!

[fz]

And they didn’t even shed light on that the order flow thats is being sold to one of the biggest HFT firms are making sure traders get worse prices. They call it market makers which they are yes but algos use predatory actions to make money in nanoseconds of every trade made in the market.

For all HFT fanboys yes is makes spread low and adds volume but it makes big block orders hard to get executed at good prices.