“… Last year, it launched its primary revenue stream, a $10 per month premium Robinhood Gold option. That allows users to skip the three-day waiting period for deposits and make trades instantly, as well as borrow up to double the amount of money in their account to trade on margin with leverage.”
What could possibly go wrong?
Presently, Robinhood Gold is $2000 margin account equivalent. Other brokers call it “Margin” while Robinhood calls RH Gold ! They charge $10/month to have this $2000 margin account. Many day traders and students (again day traders) fall prey into this insane $10/month. This is good for Robinhood, but not for account holders.
I do not have Gold account, but normal account which gives $1000 margin accounts that comes free. Even in this account, RH skip three day period and provide us next day.
The benefit of RH is commission free trade. This is very useful for small accounts/amounts.
I just use robin hood as fun trading account.
I used to hold 1 share of GOOGL, AMZN, PCLN, ISRG etc in that Robinhood account.
I wonder how they cover the exchange fees for each trade. That’s a real expense, and their only revenue is people that pay $10/mo for the premium service. Interactive brokers is super cheap.
Robinhood is aim at young people, esp students, like the way Facebook was during the start up period. They are not really revenue driven, but would like to be famous like FB, giving free trading access to students and others. This is well funded by Google VC to make it big.
They made considerable progress taking millions of accounts. see “Since its introduction in December 2014, the app has attracted a million users and executed more than $30 billion in trades, up from $2 billion in 2015”.
IB is charging $1/share, but their User Interface is horrible. RH is just simple smart phone based, buy/sell is very easy cake walk.
IB is <$3.00/equity trade. It’s $1/option contract and each contract is 100 shares.
How is Robinhood going to generate enough revenue to cover exchange fees of the trades? Every time one of their users does a trade someone has to pay fees to the exchange that executes it.
Robinhood does not have trading commission, but has exchange fees. If exchange fees are there, it charges the users.