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How Robinhood Makes Money

10433 ratings | 719478 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 (1075)
Raymond Lee (4 hours ago)
Can anyone please explain crypto currency. Their purpose in financial transactions. They are also peg to other currencies such as USD or AUD? Can you use this to buy a Big Mac meal? Or are they purely for speculation
robertoloaiza95 (7 hours ago)
so what's the catch? do they charge management fees? exit fees? inactivity fees? withdrawl fees? no fees at all?
kinn grimm (1 day ago)
When companies are secretive they are usually protecting themselves. Problem is when there would be criminal activity within an already secretive organisation . Like f.e. erm Trump org ^^ They managed to make things cheaper and are competitive because of it. That now the other companies which are left behind are gunning for them or try similar aproaches is how it works, right?
Eman namE (1 day ago)
Too bad M1 Finance is better.
Brown Thought (1 day ago)
No thanks, I’ll stick with John B.
Black Panther (2 days ago)
Microinvesting
MoreEvilThanYahweh (2 days ago)
Before the great market crash of 1929, even shoeshine boys were talking about stock prices and trends. Food for thought.
Malik Shifferaw (2 days ago)
share.robinhood.com/yakubs1
Martin Xeray (3 days ago)
That much money and no representative to talk to about your account
JayLikesSportbikes (3 days ago)
The users are the products.
Mikkle Chua (3 days ago)
I heard there are server issues on the Robin hood app and selling issues, am I wrong?
issaac zala (4 days ago)
Is there indian version of Ribinhood ?
Clement Chiu (4 days ago)
i first heard of robinhood was through r/wallstreetbets lol
Henry Lo (3 days ago)
hello fellow redditor
Qualms (4 days ago)
Robinhood makes money selling your trading data to other companies at some 10x the normal rate. They're the Facebook of trading
General Kanki (3 days ago)
Qualms yeah will check them out, my favorite so far is M1 due to fractional shares make it easy for a small investors to apply mean variance optimization. Still appreciate Robinhood for just for the disruption. I feel this is as disruptive as when Bogle created the first passive index funds.
Qualms (3 days ago)
+General Kanki Look up Webull and Firsttrade, 0 commish, leagues better in every way
General Kanki (3 days ago)
Qualms better than paying $10 per trade
Trojan Hell (4 days ago)
Robinhood will change the face of trading forever
Eliyahu Setton (4 days ago)
He didn't take from the rich and give to the poor. Robin Hood was a Libertarian, he took from the tax collectors and gave to the citizenry.
Efrain Torres (5 days ago)
Robinhood stole money from the government and gave it back to the people*
Aonghus McDonnell (5 days ago)
if you're not concerned about execution its ok
Najib Ali (5 days ago)
If you want to try RobinHood out for the first time, use my link for a free stock! https://share.robinhood.com/najiba10
Andre Barros (5 days ago)
you mean... he took from the king (government) to give it to the poor
Joaquin Currier Cubero (5 days ago)
If someone is just starting in the Robinhood App here is my link so you can get a free stock!!!! ****************** https://share.robinhood.com/joaquic91 **************************
ragnarox16 (6 days ago)
Of course people on it have less money in their accounts, it's called Robinhood, not Wealthyhood
drsest (6 days ago)
Awww, what a cute little Wall St. hit-piece this was.
forcedair 92gt (6 days ago)
The question was asked to a broker, "how much do they charge in fees to trade for a client", crickets. So you can pay yourself by learning or get ripped off by the old guys.
Lakshya Bhat (6 days ago)
A sleek UI with the fastest way to trade and commission free!
Phil McHunt (9 days ago)
I love Robin Hood Robin Hood good I make lots of money cause Robin Hood Love you long time Robin Hood Yay Robin Hood better at bed than my husband Robin Hood better in my house and in car Go Robin Hood everybody love Robin Hood (Sorry, it appears my bot got excited from the other bot comments)
Jorge Gomez (9 days ago)
their business model is selling you to the sharks, so they can front-running you.
General Kanki (3 days ago)
Yes and I am fine with that , if it was up to the big brokers they would charge $10+ per trade and still sell me to the sharks you are talking about
David Glad (9 days ago)
They have over 200 complaints with the Better Business Bureau. Their customer "support" is rock bottom, they won't answer the phone, and they use ai/bots/autosuggested responses rather than actually answer your questions if you have a real issue literally days after you contact them on a problem. (They turn email into snail mail.) For the past month I've been trying to force them to issue me a corrected form 1099 for my 2018 taxes and they're not smart enough to understand their completely wrong information. (Wrong cost basis relative to the proceeds I supposedly received on covered calls assigned.) So yes, I obviously was made to regret moving away from tradeking (itself originally a free stock trade platform a decade before) for them. At least they had a "realized gains" page so you could quickly find out if something's a miss (never was) and could bug them about it long before tax season.
Brian Carpenter (13 days ago)
Big Banks paid CNBC for this video lol
Jahed Miah (13 days ago)
DeGiro or Robinhood? Which one is better?
Jeffrey Joe (14 days ago)
Robinhood's the best.
Ahmed O.o (15 days ago)
Its a huge bubble that can blow up in any time and many people will go down with it i just wish that no one get hurt .
Daniel Buenrostro (18 days ago)
Remember kids: if something sounds too good to be true, it probably is.
Owen Bunny (19 days ago)
At least we still has aliecpress
Ary (21 days ago)
This woman sounds like Kathy Griffin lol love it
Maximilian Newbiggin-Watts (21 days ago)
Video clickbait. The simple answer is from interest earned on customers' cash balances, margin lending, and by selling order flow to high-frequency trading firms. Done.
Brian Maier (22 days ago)
I am a Robinhood user and I love that I don't pay fees for buying and selling. And I don't need a large account balance. Etrade closed my account because my account balance was too small for them.
Z kai (22 days ago)
I have more $ in jackets and shoes than what the typical Robinhood user invest lol ...
RiskxNo Ells (23 days ago)
from us
Matthew Michael Investor (24 days ago)
God bless robinhood! Without it I probably would have never got into the stock market, Ive been able to quickly learn how to get great returns and in just one day I was able to get $2400 off of an initial investment of $340
Eric Heidenthal (24 days ago)
+Colin Brignola I'm going to guess options trading. They have potential to yield massive gains if you're correct in your prediction.
Simplyontherise (24 days ago)
Matthew Michael Investor How? I have been losing money the whole time that I’ve had robinhood
Colin Brignola (24 days ago)
HOW?!
Veritas Est Lux (24 days ago)
*It's very simple: Look at the portfolios of the top money managers that have outperformed the market consistently and just mirror them w/ Robinhood if you can't drop money in a cheap SP 500 index fund.*
Najib Ali (5 days ago)
Veritas Est Lux where can you find their portfolios?
M Smith (25 days ago)
How much do you make on Robinhood for stocks ?
Gravy Trane (26 days ago)
These relics just can't accept the next level of trading. Stock brokers are irrelevant, just like the news. Uber>Taxis, Netflix>Blockbuster, Robinhood>Stock Brokers. Get used to it kids. This is the New Age! ✌
Hammi (1 month ago)
'banks are tightly regulated in this country" - hhhhhhhhhhhhhh
Robert Kyle (1 month ago)
I was skeptical about Robin hood but so far so good. Just dont make risky investments and you will be fine. Your money loses value sitting in the bank.
Phatastic Meemo (1 month ago)
It’s a good starting point for someone with a smaller portfolio but there are some questions that may arise when trading in larger volumes. However for larger portfolios I still stick with E-trades. I do appreciate it for allowing those who are afraid of the stock market to realize that it is nothing to fear. It is something to study and understand. It’s fun.
Ivan Martinez (1 month ago)
Join Robinhood and we'll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. https://share.robinhood.com/ivanm648
Justin Raley (1 month ago)
Robinhood IS revolutionary. I truly believe they're creating new investors in the market. Without Robinhood, I would NOT have purchased stocks. Period.
Daniel Paul (1 month ago)
Robin hood didn't take from the rich, he took from the government that had stolen from the poor to begin with
Raditya Oe (1 month ago)
So basicly big boys worried to one potential boy. Who could change (decrease, even take) big boys wallet. Big boys get money from people activities, and this potential boys, make challange to stop that ways things to be used. So. Decide it.
Blind Bob (1 month ago)
If it seems too good to be true........... it is.... Sounds like they are "dark pooling"
benjamin hidalgo (1 month ago)
HOW DO WE BUY ROBINHOOD STOCK THOUGH aahahahaha
Ein Kommentar (1 month ago)
The real question is though, whether they are offering B O X S P R E A D S.
Lousy (1 month ago)
Hey I’m 16 years old and really want to know how trading/investing works. Is there any books or tips y’all recommend. They don’t teach this in high school :/
The Trader Guy (1 month ago)
they make their money by selling order flow to the hft's. duh.
Truth Seeker (1 month ago)
05:15 stay away from all such companies. Since when "Market Maker" became anything but pure scam. It's the same scam that happens in the forex. You wanna invest in something. Go to the stock exchange market or invest in your education.
Monica Lewinsky & The Did Not's (1 month ago)
This company is a "scam" (I used quotes so they won't sue me_
Truth Seeker (1 month ago)
06:44 "staggering 240$" loooolz. Since when 240$ became a staggering amount of money. This reporting is nothing short of an AD for the company. My dad and life have taught me one thing: NOTHING COMES EASY IN THIS LIFE. SO YOU SHOULD QUESTION THOSE SCAMMERS.
Hi! How are You? (1 month ago)
Made more than 20k on trading Robinhood commission free🙏
Frances Jean Louis (1 month ago)
As long as I’m gaining and not losing. In time, I will make more than enough money, I think Robin Hood is great!
Matt Dorton (1 month ago)
Robinhood is the bomb!!! Robinhood Gold is even better! Bout damn time we have a trading platform that allows us to do our trading for free!!!
Cesar Ocampo (1 month ago)
I don’t trust MSM, this is biased.
James Gunningham (1 month ago)
Trading 212 does all these things
Ed Lo (1 month ago)
In today's world. Cutting out the middle man is the way to create value.
san mapholoba (1 month ago)
Please make it available in South Africa
Mark M (1 month ago)
yeah accept when you have options and robin-hood shuts down and u lose all your money. happened twice to me already
Ed G (1 month ago)
here's the thing with robin hood, its extremely lackluster! execution times are seriously the slowest most inaccurate on the market (yes i get it, it's free what do i expect with no brokerage fees) but as a trader, robin hood is the app you use to "pay your tuition" and not much else. can you make some money through it? yes absolutely but get ready to hit the wall. robin hood is more like " get from the poor and give to the rich" as like i said earlier, the execution times will break you time and time again (if you know how to trade and use the 3 day trades allowed wisely and you don't have 25K to clear you from pdt) my take though, not an expert here.
ncbookz.com llc (1 month ago)
Rob in a hood..
Jeremiah Sage (1 month ago)
Classic bank strategy: new successful company threatening how you’ve always done thing? Call your buddy in the Feds.
Chewie 13 (1 month ago)
I bet other brokers are majorly hating of this change. Competition is good.
Mohamed Dahab (1 month ago)
Yeah that's agreat app 💚💚
NEX STER (1 month ago)
Does Robinhood app works in india
Karon Rowell (1 month ago)
Recieve Your Free Stock Berkshire Hathaway, Apple, Microsoft You have a 1 in 200 chance of getting stock in one of these companies when you use my link to signs up. GE, Energy Transfer, CenturyLink You have a 1 in 250 chance of getting stock in one of these companies when you use my link to signs up. share.robinhood.com/karonr
Zarafsha Mahmood (1 month ago)
Customer service is weak sauce
Julio Reguero (1 month ago)
I closed my Robinhood account two years ago. Using Betterment now.
BlackWizzard (1 month ago)
Robinhood makes money by using costumers money to sell it to high frequency trading. Eventually it will make a huge mistake and many people will loose money. Wonder why this revolutionary app is illegal in EUROPE.
Fuentes (1 month ago)
I love how those guys working for the big monopolies keep trying to make the app look bad
Greg (1 month ago)
Is this app useful for short term (day trading) or just for longer term investments?
Deeveed (1 month ago)
Great app for new investors honestly, remember to set a limit price not market LOL
MahaVakyas (1 month ago)
did he really say "a staggering $240 a year." lol
MahaVakyas (1 month ago)
Indian co-founder. amazing...
Jeff Human (1 month ago)
This video popped up in my recommended videos after weeks of ad blasting by Robinhood. To anybody out there reading this, make sure to max out your employer's matched 401k plan and take full advantage of an IRA with a Vanguard S&P 500 Index Fund before playing this legal gambling game.
Cody Win (1 month ago)
Join Robinhood and we'll both get a stock like Apple, Ford, or Sprint for free. Make sure you use my link. http://share.robinhood.com/codyw323
Angel Ocegueda (1 month ago)
I love this app, email me for a FREE Robinhood stock no strings attached: easyincome@yahoo.com
T5yll4 (1 month ago)
The recent consistency in system outages has got to stop though...
Jason Flynn (1 month ago)
https://share.robinhood.com/jasonf1896
Prajwal Shetty (1 month ago)
Very very shady company. This company has screwed over multiple customers. They pretend to have glitches on their app when customers are in profit. If you want to invest lots of money in this app.. remember this .. .no matter how much you lose because of their glitches, you will be offered a $75 gift card with an apology. So go ahead and invest thousands of dollars using this crap and then watch what happens.
Ralfy Ibrahim (1 month ago)
Webull is free commision too
Andy Morejon (1 month ago)
The media just does not like robinhood, they seem to have a distaste for its existence and it might be because they are being paid to give robinhood bad publicity or simply because they do not like innovations that avoid regulations.
MrZnyper (1 month ago)
Why make this video when the answer is clearly risk free box spreads? 🤔
itsdavidcode (1 month ago)
I’m up by $40 bucks on the app. Whewwww!
Luke Rhoads (1 month ago)
They are a horrible app because these novice traders are easy to frontrunner's and know nothing about how the market works, so they can sell their users trades to dark pools that will make it very inefficient for the user, but they will not notice it.
Ltpwnface (1 month ago)
I use Webull, way better than Robinhood imo
Jim Y (1 month ago)
time will solve these problems, there will be a Robinhood checking account, savings account, and even hedgefund services
Diju :: XD (1 month ago)
Reporter was really beautiful 😜😍
Laura L (1 month ago)
I love robinhood app. Thank you Robinhood!
ruddy illanes (1 month ago)
Reminds me of PiedPiper, in fact youtube god now is suggesting me to watch sillicon valley clips.
Taylor Cole (1 month ago)
aaaand why are we mad at them for making money? As long as my trades stay free and the prices are correct, why do I care how they get their money?....
Amazon and eBay Guru (1 month ago)
I prefer Wealthsimple and I explain why in my latest vid!
Dirty Sauce (1 month ago)
Don’t get it unless you’re committed to it they’ll delete your account and you’ll never get it back