The TRUTH about Robinhood Investing

Videos
After the Robinhood incident, lets discuss how they make money – what this means for the company – and how this might affect their potential IPO. Enjoy! Add me on Instagram: GPStephan

The YouTube Creator Academy:
Learn EXACTLY how to grow an audience, rank videos on the front page of searches, build your brand, and turn that into another income source: https://bit.ly/2STxofv $100 OFF WITH CODE 100OFF

Get 2 Free Stocks on WeBull when you deposit $100 (Valued up to $1000): https://activity.webull.com/landing/index.html?cs=a&s=GrahamS

My ENTIRE Camera and Recording Equipment:
https://www.amazon.com/shop/grahamstephan?listId=2TNWZ7RP1P1EB

My second channel:
http://www.youtube.com/c/thegrahamstephanshow

In terms of how Robinhood makes money, it’s a little uncertain since they’re not a public company…but, it’s estimated they earn their money from their 6 million users in a few ways:

One: They make money from their Robinhood Gold service, starting at $5 per month, which offers you additional features, like margin trading, level 2 market data, research reports, etc.

Second: They charge a 5% interest rate on their margin accounts

Third, they make money from un-invested cash you have sitting on their platform.

Fourth, and probably the most controversial…is that Bloomberg says that almost half of Robinhood’s revenue came from a practice of routing order flow…
https://www.bloomberg.com/news/articles/2018-10-15/robinhood-gets-almost-half-its-revenue-in-controversial-bargain-with-high-speed-traders

This is pretty much the practice where Robinhood itself doesn’t execute the stock trade, but they instantly outsource it to another company that pays for the right to execute those trades. Those firms usually earn a very, very small percentage off the trade…according to Bloomberg, that was $0.0024 cents per share,” but with $150 billion in trading volume, it adds up.
https://outline.com/zwzzVm

Besides that, they’ll make some eventual interchange fees with their cash management debit card, and I’m sure they have a few other things in the works…but I have no clue whether or not they’re actually a profitable company, and what they plan on doing to eventually expand into banking and lending services, etc.

In terms of where we go from here…well, IDEALLY, Robinhood fixes the glitch and sweeps it under the rug – and then keeps a close eye on for anyone else trying to exploit any faults or glitches within the system.

Like I said…mistakes and glitches happen, no one expects Robinhood to be perfect. But how they handle those mistakes is going to be an indication of how they’ll handle FUTURE issues, as well…which is inevitable, and it happens to every business out there.

I wouldn’t be surprised if Robinhood – and many of the other brokerages out there – changed the way Margin Accounts are handled. Realistically, there’s no rational reason why everyone is given the same access to margin…because if you have $2000, agree to pay for Robinhood gold, and a 5% margin interest rate, you can borrow up to 50% of your purchase to invest. In NO other industry would you be able to do that…so it doesn’t make sense that this would be the case for an asset like stocks, at least without a little more thorough background check.

Finally…let me say this. I have nothing against Robinhood, I use them, and I think they’re an overall great platform. If it wasn’t for them, I bet NONE of us would be seeing free stock trades today – we almost certainly owe that to them, and they’ve absolutely shaken up the entire industry in such a great way.

For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com

Products You May Like

Articles You May Like

Google is getting into banking to take back the business it lost to Amazon
2 Brilliant Dividend Stocks To Buy For 2020
Dave Ramsey’s 7 Baby Steps: What Are They and Do They Actually Work?
Prepare for ‘wow!’: These 3 hot SUVs could blow the doors off the LA Auto Show
Here’s what every major analyst expects from Nvidia’s earnings report after the bell

Leave a Reply

Your email address will not be published. Required fields are marked *