The number of user accounts on commission-free investing app Robinhood has exploded to more than 10 million. The six-year-old startup has been growing at an explosive rate, and the number of brokerage accounts on its platform is double than it was a year ago.
The impressive metrics mean that the New York startup has been able to bring on nearly as many customers as TD Ameritrade, which onboards 11 million users and has been in the online brokerage industry since 1975. One of Robinhood’s biggest competitors, E-Trade, had 4.9 million brokerage accounts at the end of 2019, with an annualized new account growth rate of seven percent.
Six years after Robinhood launched with no-fee trading, major brokerages were catching up with a wave of fee-eliminating announcements over the past two months. In the span of just a few weeks, nearly all US online brokers eliminated commissions, which could be a direct hit to the start-up that kicked off the trend in 2013.
The Silicon Valley company, whose mobile app lets users buy and sell public stocks without trading fees, said that it would continue to increase hiring and develop new products around its stock trading app.
Robinhood’s offering is particularly popular among the “millennial” population, who appreciate the ease of using the app to trade several asset classes without fees. The company also unveiled plans for a bank account-like feature that will pay customers 2.05 percent interest and offer a no-fee debit card service.
Hitting more than ten million users isn’t the only milestone for Robinhood. The company has recently raised its latest round of funding, bringing in $323 million at a $7.6 billion valuation, up $2 billion from its Series D valuation in 2018.
For now, Robinhood can keep its free platform afloat through making compromises to some business aspects such as not having many physical locations, a small staff for client service, and not spending on massive promotional campaigns.