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How Robinhood Makes Money

15506 ratings | 1181422 views
Robinhood, an investing app valued at over $5 billion, says it's trying to "democratize America's financial system" by making investing accessible to the little guy with free trades. It's an eye-popping valuation for a financial company with opaque metrics and plenty of competition. The young company had its share of missteps as well, prompting questions of whether or not it can handle primetime. Robinhood has faced criticism for business practices that allow it to offer free trading. It also botched the rollout of a checking and savings account feature in late 2018, garnering concern from regulators. But the company's incredible growth and popularity with younger investors – more than 6 million users by the end of 2018 – means it could be a major player in banking moving forward. » Subscribe to CNBC: http://cnb.cx/SubscribeCNBC About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Connect with CNBC News Online Get the latest news: http://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: http://cnb.cx/LikeCNBC Follow CNBC News on Twitter: http://cnb.cx/FollowCNBC Follow CNBC News on Google+: http://cnb.cx/PlusCNBC Follow CNBC News on Instagram: http://cnb.cx/InstagramCNBC #CNBC #Robinhood How Does Robinhood Make Money?
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Text Comments (1424)
Anthony Le Entrepreneur (1 day ago)
App sucks. Support never gets back.
Matthew Maio (1 day ago)
What does Robin hood do with crypto? Let's talk about Robin hood Ireland and coinbase
JustinSTeam2 (1 day ago)
I love robinhood!
JC Horse (1 day ago)
JC Horse (1 day ago)
Thomas Zach (3 days ago)
This app is solid
DakAttack (3 days ago)
Robin Hood didn't take from the rich. He took from the government via tax collector.
Nicollo Malik Lavelle (4 days ago)
I'm using Robinhood app but how do i invest in Robinhood stocks
Drool Alot (4 days ago)
Banks aren't tightly regulated anymore.. #fakenews.... The system is rigged
Brandon Annisette (5 days ago)
Do not trade options on Robinhood. I’ll forever appreciate the app for what It has taught me and it last lesson was Do Not trade options on Robinhood.
james molson (6 days ago)
robertbslee (7 days ago)
Utter failure
Brian Jefferson (8 days ago)
Their app name is a misnomer. Actual English Robinhood was rumored to take from the rich and give to the poor. Robinhood App takes from the common man in a way that they neither see nor notice (slippage) and gives it to the rich (Market Makers). It wouldn't be a 5 billion dollar company without that money coming from somewhere: it isn't coming from Robinhood and it isn't coming from the party with first dibs on taking the other side of Robinhood order positions. That 5 billion in revenue is necessarily coming from Robinhood app orders getting worse order fills than those account holders would have gotten if they paid commission upfront. The organization facilitating the trade is pocketing that difference in accordance to a contract business deal. Is that better or worse than just paying standard commissions? You'd never know because that exchange process is taking place in a dark pool. Once again people without advanced technical knowledge and information are being taken advantage of by those who have it. I'd rather know how much a company was taking from me than have that cost hidden. Just because they're not calling it a 'commission' doesn't mean you're not paying for the service. Always remember the modern day technological adage that 'If you're not paying for the technological product or service, you are the product' (applies to YouTube also unfortunately, considering their access to viewing habits data and other capabilities made available to them via app permissions.) In this case, the order fills are giving Robinhood customers less value than they should've gotten for that same dollar amount with a broker who makes their money transparently via commissions, but their customers just don't notice because the app is designed to make their source of revenue look like the cost of the position. The fact that 'Payment for Order flow' as a revenue strategy was allegedly pioneered by Bernie Madoff, the notorious Ponzi scheme mastermind, doesn't say anything good about the Robinhood app either. Deceit and secrecy aren't attractive qualities for a broker. I also wouldn't be surprised if most users of the Robinhood app mostly entered and exited positions via market orders, which would worsen the potential scope of this phenomenon.
KeepIt 100 (8 days ago)
I invest with them. I am a millennial. 😊
GYM STAR ENT (9 days ago)
Great app until you need to contact customer service😕
LordsOfSkulls (12 days ago)
Made money on robinhood and dont need higher capital to enter the market... and with no comissions, its not nickle and diming out my investment.
Chris (13 days ago)
fallen son (13 days ago)
used to be great, back in 2017, now its a scam, idk whats going on behind the scenes, but something isn't right, havent wont since 2018 early
Ashfaq Sheikh (14 days ago)
When I first learned that Robinhood is selling order flow to high frequency firms, I was upset. But on second thought, I said to myself 'so what'?
Brad Suarez (14 days ago)
All these comments thanking Robin Hood seems very fishy!
nicemon george joseph (15 days ago)
That's more of our zerodha
chanji (16 days ago)
I wish its in australia
Athear Nasery (18 days ago)
Robinhood is going to change the stock market world
Z.O.E (19 days ago)
Half of those protesters don't look like they had jobs.
rico Tomas (20 days ago)
why is this video about robinhood making money ?? i want to know if i can make money off of it
St0rm Ranger (20 days ago)
Quick put all of your life savings into Wallstreet before Trump collapses the market with the trade war. CNBC Wallstreet funders would looove that. 😂
St0rm Ranger (20 days ago)
If CNBC is featuring it, it must be a scam backed by the 1% themselves. Don't forget who owns this network.
Gordon Mcsweeny (21 days ago)
I love selling financial products to the ignorant. It's like taking candy from a Millen.. I mean baby.
Desmond Bradley (21 days ago)
I made huge losses trading on my own but I've been able to recover all that I lost.
Desmond Bradley (21 days ago)
@Fedrick Jones his name is Stephan Briggs, you can reach via "{stephanbriggs54@gmail.com}"...feel free to get along with him
Fedrick Jones (21 days ago)
@Desmond Bradley how can i get in touch with him your expert?
Desmond Bradley (21 days ago)
@Darlene Borges I trade with the help an expert, he's the reason behind my sudden success for past 6 months.
Fedrick Jones (21 days ago)
@Desmond Bradley am also interested
Darlene Borges (21 days ago)
@Desmond Bradley how are you able to make that amount, I've been struggling to do just that
Valens (23 days ago)
Best stocks to get?
apope06 (24 days ago)
Young ppl need to invest early to generate wealth over 40 years. This app is a fantastic thing even if you put in $20 or $10 per month. Thats like $120 or more per year. You can be building several thousands of wealth until your 30s where you can put in $5,000 and retire s millionaire.
apope06 (24 days ago)
Who else is using Robinhood as they watch this?
Armando Garza (1 month ago)
Robinhood is the best! Amazing how historical movies or shows can predict future events... I think Robinhood fairy tale is just one that reflects current events.. It has change my financial life..
John Love (1 month ago)
Their customer service is garbage and website is not set up very well. Super messy. They don’t present information well and it’s impossible to ask simple questions without filtering through thousands of legal documents. Its a rushed horrible app trying to be a legit bank. 👎👎👎
trebledc (1 month ago)
Smells like ponzi
wholeNwon (1 month ago)
I'm old and have been an investor as distinct from a speculator for a very long time. I understand the time-value of money and the arithmetic of compounding. One of the several cardinal sins of young people especially is trading. Stock picking and market timing are fools games. Index very broadly, as cheaply as possible, as tax efficiently as possible, reinvest dividends when paid regardless of what you think the markets are doing, never listen to the talking heads, "analysts", brokers, etc. Never sell. Check your accounts regularly...once a year is about right...at tax time. That's it, just about everything an investor needs to know. By the time you retire you will have as great an opportunity as the financial markets and human economic progress can provide to become wealthy. Start as early as possible. Be frugal and enjoy saving.
Khang k (1 month ago)
stocks from Robinhoodare likely higher.
cantu (1 month ago)
Nope you can check the prices out side the app and it's the same
Yusuf Khan (1 month ago)
Hope people know when Robin Hood gets bankrupt everyone’s investment will be nonexistent.
cantu (1 month ago)
Well no that's not how it works 😂 if I own 5 Nike stocks I own 5 Nike stocks doesn't matter if Robinhood is there or not I own them
Mark Hoffman (1 month ago)
ROBINHOOD SUCKS! WHAT THE F IS WRONG WITH THEIR SYSTEMS? I keep getting response that has nothing to do with the question I wrote and they only offer me a "yes" for an answer as to whether or not my question was answered to my satisfaction. And they offer no other alternative inquiry method. What kind of fool would wire money into an account with this features? I now understand why Sosnoff is funding Dough, they clearly will wipe this crap broker out.
Amazon (1 month ago)
The robinhood app is slow lately
SmashKing17 (1 month ago)
Love Robinhood! You did it baby!
Yusof Sarangani (1 month ago)
They lost me at 'crypto-trade'. Nah, folks. I refuse to be part of predatory trade practices.
ihswap (1 month ago)
My math teacher in 12th grade had almost $600k in his Robinhood account.
Dark Angel (1 month ago)
Look at Bitcoin now
Saudi Prince (1 month ago)
I just wanna say thanks for the free advertisement
Aron (1 month ago)
robinhood is awesome
Mike Fee (1 month ago)
Happiness Within (1 month ago)
Please come here in the Philippines 😍🙏🏼
vysakh haritharsion (1 month ago)
Anyone know any app or this same thing to work internationally
Michael Hawkins (1 month ago)
I love robinhood
Aadarsh Kumar (1 month ago)
Did anyone noticed the name Baiju bhatt
Ollie H (1 month ago)
I'm not learning..
Foued Bendaya (1 month ago)
lmao , bitcoin at 3k talking about loss lol
Lin O'Macho (1 month ago)
Wolf of wall street?
Zach Blasig (1 month ago)
https://www.youtube.com/watch?v=9SOA-OP45Y8 Hey this is my video on my investment plan and how far I've come. Thanks! Have a great day!
Bro Migo (1 month ago)
I thought it’s a charity donation app, but it’s yet another stock market scam apps
abster (1 month ago)
Counter trade ,going against position of your client and they are helping market maker. By doing all this they earning quite good but this type of brokerage house are always against you rather than with you.
Dank Nova (1 month ago)
They are making how much money, yet they can’t add a crypto wallet or any other features.
Hansol Yoon (1 month ago)
Great app.
jeebanjyoti dash (1 month ago)
When will it be available in india
Georgehirchert gmail com (29 days ago)
I know a Platform what works in India. Send me an email
David (1 month ago)
Get to the point.
Media Star (1 month ago)
with a name like Robinhood! goodluck! the jokes on you.!
tsland4056 (1 month ago)
When I started Robinhood, I had to make boundaries quickly. I was obsessed. I have made some poor buys and sold to soon, but I am learning. Can't wait to become a millionaire....lol
CRAAAZY GAMER (2 months ago)
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CRAAAZY GAMER (2 months ago)
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CRAAAZY GAMER (2 months ago)
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CRAAAZY GAMER (2 months ago)
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ONLIESVAN (2 months ago)
I wish Webull CAN fix their terrible UI. RH nailed it with user friendly menus.
MrGiggity890 (2 months ago)
Actually Robinhood took from the greedy government officials and returned it to its rightful owners.
avinash reddy (2 months ago)
Thanks to Robinhood..
BumheaD (2 months ago)
all 3 bank's give you 3-5 times ur deposit in Trading only money, robin hood does not
BumheaD (2 months ago)
Josh Nooromid not robinhood
Josh Nooromid (2 months ago)
you can pay $10 a month for matched deposits son
Eugene Kovalenko (2 months ago)
Its like Forex , they just using your money but will never buy any real bonds. It’s like pyramid
Edwin van gent (2 months ago)
Cosme Vallejo (2 months ago)
Ok starter, just don't like how they stall on purchase. I bought at a stock 9 cents cheaper than what they sold to me. Sucks! I'll be moving to other apps.
DrivingHawaii (2 months ago)
Download Abra app and invest in cryptocurrency instead lol
Brian Taylor (2 months ago)
CNBC the old fart yelling get off my meticulously manicured golden fenced-in lawn. What’s that stand for CanNotBeatCrypto? or CryptoNeedsBetterCoverage? We’ll be looking back at CNBC coverage in a few years and it’ll all sound like the Bryant Gumbal and Katie Couric “What is internet!?” clip: “Allison, can you explain what internet is?!? ... Whatdoyou right to it like mail!?
Bill bick (2 months ago)
Brian Taylor (2 months ago)
Awwwwwwwwwwww da wolves of Wall Stweet are losing their monopowy on stealing people’s money for guessing which stock to invest in. Hand me my tiny violin 🎻😭😭😭😭
Teflon Smile (2 months ago)
Yeah I was locked out of my account for over 14 hours....mobile app is lame
fnjsaunders (2 months ago)
If only you could stop the government from taking the people's money to make themselves and their friends rich...
Justin Krickovich (2 months ago)
Well, now, months later, things look pretty good if you invested in Bitcoin back then and stood your ground. 7:47
J Bit (2 months ago)
I bought bitcoin thru robinhood. it was at $6,0000 now its at $11,600. Good times.
R B (2 months ago)
a staggering $240 a year...lol i know that's over 3 times than ur local bank, but just how he said staggering... made me lol...
R B (2 months ago)
@rotagbhd gotcha, I thought he said 0.9
rotagbhd (2 months ago)
More than 33x, not 3.
Creative Mechanic (2 months ago)
Not FDIC backing....... I hope y’all ready to loose everything in the next recession
Tony Johnson (2 months ago)
Robinhood is a scam. Its "free" commissions. I bet their investors vote for Bernie thinking they will get free stuff. Jk, Bernie supporters don't invest, they'd need a job first.
mac 187 (2 months ago)
They denied me twice
mac 187 (10 days ago)
@Yuna gab naw account
Yuna gab (10 days ago)
Lance Dooley (2 months ago)
Im thinking about getting this app. My 401k and other investments are on Fidelity. Im 30. The trade fee sucks because you have to factor buy and trade fee. But im way way the hell ahead of millennials and genzies. Pshh. Debt free and working triple the hours like the savers is the only way. If your not working 3 jobs like the conservatives your not gonna make it. This is a game. I will freakin win this.
NFLClip2018 (2 months ago)
Well the people who lost their money in bitcoin just got it back
peter skrzyniarz (2 months ago)
its sucks for crypto. not even real crypto. just # trading. now they are losing a lot of $ from bitcoin and keep crashing the buying and selling of crypto
Adrian Mantilla (2 months ago)
Tip: everyday i learn how to invest by following pro investors and i learn from there tips and tricks and i use those to my own opinion on what stock I should by and what I’m saying is that never follow anyone’s opinion on what stock they buy
Nirav Patel (2 months ago)
Good for entry level.
buybuypig (2 months ago)
Robinhood is a scam!!!! They make money on users deposits then selling them nothing. Altering prices to their advantage. If you buy btc you will never get the actual BTC. They will say they sold you one though. They bet on people loosing money trading.
buybuypig (2 months ago)
Khunta Khan wow r an I d i ot
Khunta Khan (2 months ago)
buybuypig big talk no proof
buybuypig (2 months ago)
Instigator i just need to make a video of me trying to trade at this scam and it will be over
Khunta Khan (2 months ago)
lies, u can check prices on different sources to see how much of a liar you are
Drew EX (2 months ago)
Is Robinhood really legit? I'm kind of skeptical about this free no commission idea. Almost downloaded the app on my phone but will dig a little deeper into it before starting the process. Nothing in life is free you know! Too good to be true?
Khunta Khan (2 months ago)
na its legit. completely free. Get someone’s referral code though before you start to get free stock for you & your friend
Dave M (2 months ago)
Uhh ur talking about institutional investors vs the retail investor
BATCH W (2 months ago)
Raj and howard IRL
Thatwaterboy (2 months ago)
The stock market and Central banks are a scam
E. Castillo (3 months ago)
Big CON for Robinhood. Doesn't give you the option for beneficiary
Don Espoleto (3 months ago)
Jordi Brizuela (3 months ago)
Robinhood is the best thing ever.
Bryan Peralta (3 months ago)
Robinhood? free trades,no thanks. They have very little to no shares to short for low floats. it’s free but they crew you on executions. NOTHING is free folks. do you really think brokers are going to put robinhood as a priority over those who are actually paying... i much rather pay $5 execution and get out of a losing stock quick, and not have free trades and be loosing more money and my order are not being executed. imo!
Khunta Khan (2 months ago)
Bryan Peralta you really dont need that much speed unless a stock is moving super fast (hence why i said that is a unique situation)
Bryan Peralta (2 months ago)
Instigator re-read. is not all about the fee for me, it’s ALL about executions and executions speed
Khunta Khan (2 months ago)
thats a very unique situation to be in to hate on robinhood. You act like .003% shittier price on execution is a crime against humanity