Robinhood - Overview
Robinhood was founded by Vladimir Tenev and Baiju Bhatt in 2013, launched in December 2014, and operate out of Menlo Park, Ca. The founders previously built high-frequency trading platforms for financial institutions in New York. Over time, Vlad and Baiju saw the potential of offering brokerage services to retail investors using the same technology to offer zero commission trades. Effectively, they have created one of the fastest growing online commission-free stock brokerage mobile platforms.
By, early March 2016, Robinhood had nearly one million customers. As of early 2018, it had 4 million user accounts which is more than the online broker E-Trade. In June 2018, Robinhood announced it was seeking to obtain a US banking license. Currently, the mobile app is available for iPhone, Apple Watch, Android, and via Webpage. To keep their costs down, Robinhood has no company storefront offices and does not provide any reports or built-in analytical tools within in mobile platform.
How does Robinhood work? Is it safe?
As with all other brokerage firms, Robinhood is regulated by the Securities and Exchange Commission (SEC). However, the SEC does not offer protections for individual investors meaning, they do not offer investment protection from actions the brokerage may take. Although, Robinhood participates voluntarily as a self-regulatory organization such as the Financial Industry Regulatory Authority (FINRA). SRO’s are not a part of the government, but they are overseen by the SEC. Moreover, all brokerages that are FINRA members submit to the organizations rules and regulations, all of which cover testing, licensing agents and brokers, and a transparent disclosure framework that protects investors.
Robinhood – Taking it to the Streets (IPO)
In recent months, Robinhood has announced they are preparing to go public. The company CEO, Baiju Bhatt has stated that in the “medium to long-term” the company will look to do an initial public offering, but first they are seeking a CFO (Chief Financial Officer). This means, you may soon be able to buy public shares of the company.
Famous Funding – Snoop Dogg & Jared Leto
In its seed capital funding from investors, Robinhood received $3 million from Google Ventures, Andreessen Horowitz, Index Ventures, IT Ventures, Social Leverage, and Elefund. In addition, they raised an additional $13 million in Series A funding in September 2014. At that time, Jan Hammer of Index Ventures led the round and joined the Robinhood board. Among others were Ribbit Capital, Howard Lindzon, co-founder of StockTwits and general partner at Social Leverage; Aaron Levie, founder of Box; Dave Morin, founder of Path; Jared Leto; Snoop Dogg; and Nas of QueensBridge Venture Partners.
Stocks, Options, Crypto – Oh My!
The functionality of the investing platform allows retail investors to easily buy, sell, and trade a variety of investment vehicles including stocks, options, and cryptocurrency. In addition, Robinhood provides users with easily navigable web-interface to conveniently track your portfolio and positions accurately.
Currently, Cryptocurrency investing through Robinhood is only available in a handful of states (Alaska, Arizona, Arkansas, California, Colorado, Florida, Georgia, Indiana, Iowa, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Jersey, New Mexico, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia, and Wisconsin.) Also, you should note that Robinhood will not allow users to withdraw their cryptocurrency to a personal wallet. However, users are able to buy, sell, and hold cryptocurrency if they are located in one of the qualifying states listed above.
Robinhood offers access to over 5,000 U.S exchange-listed Stocks and ETFs, and over 250 global stocks not listed on American exchanges such as Tencent, Nintendo, Adidas. In the near future, Robinhood plans to expand even more by adding popular listings from France including Ubisoft Entertainment, LVMH, and Michelin.
A listed option is an option that is traded on a national options exchange such as the Chicago Board Options Exchange (CBOE). Listed options have fixed strike prices and expiration dates. Each listed option represents 100 shares of stock (known as 1 contract). Options should not be traded by investors new to trading as they can be much riskier to a less experienced investor than buying and trading stocks. You can check out some options trading basics here.
Robinhood – Tips for new users
Use limit-orders. Be patient
Don’t buy stocks in real-time using market orders. Instead, you should find a reasonable buy in price, and let the price action come to you. Don’t chase prices up, you’ll often find they come back down to a level you wanted. This is especially true for early mornings when the market opens as many traders are looking for positions to enter and this often causes prices to swell in the morning before leveling off in the later trading hours.
Do your research. Don’t “guess buy”
This is a very important protocol, you should always do at least a little bit of market research on a company before choosing to buy it’s stocks. Ask yourself questions about the investment, and know why you are investing into something as opposed to impulse buying because an idea or company sounds good at the time.
Is this a company that will be profitable in the long-term?
Who runs the company? What experience do they have? And do I believe those people can accomplish the objective they’ve outlined?
How long do you plan on owning the stock? 5 months? 5 years? Know what you’re doing before you do it.
Robinhood – Free Stock!
That’s right! Robinhood even offers a free stock for new users sign-ups! Here’s how it works, the shares of free stock are chosen randomly from their inventory of settled shares. The value of shares can range anywhere between $2.50 and $200, and fluctuates based on market movements. Robinhood chooses from the most popular companies within the app based on the total value and the price of each share.
So what are you waiting for?! Go grab your free stock now and start investing today!
Free stock: Join Robinhood and we’ll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. https://share.robinhood.com/taylorb768