As I mentioned in one of my previous Boston real estate blog posts, yesterday a few of us drove up to Hampton Beach in New Hampshire. When you’re in a car with middle-aged (wanna be heartthrobs) eventually the conversation turns to money.
What is Robinhood? How does Robinhood make money?
Robinhood is a discount brokerage that offers commission-free trading through its website and mobile app.
1. The company generates significant income from payments for order flow, a common although controversial practice whereby a broker receives compensation and other benefits for directing orders to different parties for trade execution. Robinhood refers to this revenue as “rebates from market makers and trading venues.
2. While the payments are negligible for small retail trades, a company that directs billions of dollars in trades to market makers can earn substantial amounts. Independent analysis suggests that payments for order flow generated an estimated $69 million in revenue for Robinhood in 2018, up 227% from the previous year, and accounted for more than 40 percent of its overall revenue.
3. Other sources of revenue include a $5 monthly fee for optional membership to Robinhood Gold, which gives the client access to margin loans and investing tools; interest on uninvested cash; lending stocks purchased on margin; and fees on purchases using the company’s debit card.
Boston Real Estate and the Bottom Line
So If I bored you with this topic, I apologize.