Robinhood Markets
| Company type | Public |
|---|---|
| Industry | Financial services |
| Founded | April 2013 |
| Founder | Vladimir Tenev, Baiju Bhatt |
| Headquarters | Menlo Park, California , United States |
Area served | United States, United Kingdom, European Union |
Key people | Vladimir Tenev (co-founder) |
| Products | Electronic trading platform (stocks, ETFs, options, futures, cryptocurrency), cryptocurrency wallets, wealth management, credit cards, banking products, Sherwood.News |
| Website | robinhood |
Robinhood Markets, Inc. is a financial services firm based in the United States, with its main office located in Menlo Park, California. It provides an electronic trading platform that facilitates transactions involving stocks, exchange-traded funds, options, index options, futures contracts, prediction market outcomes, and cryptocurrency. Additionally, the company offers services such as cryptocurrency wallets, wealth management, credit cards, and various banking products—some of which are delivered in collaboration with FDIC-insured banks—as well as a news outlet called Sherwood.News.
Robinhood’s income is generated through multiple channels: transaction fees (including payment for order flow and cryptocurrency markups), which accounted for 54% of revenue in Q2 2025; net interest income derived from margin lending, customer cash holdings, and credit cards, contributing 36%; and other revenue streams like subscription fees and advertising on Sherwood.News making up 9%. The platform supports 27.4 million funded users managing $279 billion in assets under custody. Its operations span the U.S., the United Kingdom, and it provides cryptocurrency alongside tokenized stock and ETF trading within the European Union.
The company’s name draws inspiration from the legendary figure Robin Hood, reflecting its mission to "democratize access to financial markets beyond just affluent individuals." It was a trailblazer in offering commission-free stock trades by leveraging alternative revenue models. Robinhood primarily serves a millennial clientele; as of March 2025, the typical user was 35 years old.
Trading restrictions on Robinhood include limitations on mutual funds, preferred stocks, bonds, certain speculative penny stocks, and a prohibition on initiating new options positions during the final 30 minutes before expiration.
History
Established in April 2013 by Vladimir Tenev and Baiju Bhatt, who had previously developed high-frequency trading systems for financial firms in New York City, Robinhood was conceived as a free, intuitive, and engaging mobile application.
The founders presented their app at LA Hacks in April 2014 and released a beta version later that year. The fully launched mobile application became available in March 2015.
In February 2018, Robinhood moved its headquarters from Palo Alto to Menlo Park’s former Sunset magazine building.
That same month marked the company’s entry into cryptocurrency trading by introducing commission-free bitcoin and ethereum transactions.
By December 2019, Robinhood had expanded into cash management by launching banking products insured by the FDIC through partner banks.
During Q2 of 2020, amid a stock market downturn, Robinhood experienced a 139% increase in trading volume compared to Q1—a growth rate surpassing other leading brokerages.
March 2024 saw Robinhood begin operations in the United Kingdom as part of its international expansion strategy.
In April 2024, the company unveiled "Sherwood News," a new media platform that accompanied the rebranding of its financial newsletter Snacks.
In March 2025, Robinhood announced plans to roll out wealth management services aimed at retail investors through private banking solutions.
The firm obtained a brokerage license from the Bank of Lithuania in April 2025 to facilitate business within Lithuania.
By June 2025, Robinhood further extended its presence across the European Union by enabling trading in tokenized ETFs and stocks.
Acquisitions
In August 2021, Robinhood completed the acquisition of Say Technologies, a company specializing in shareholder voting and management engagement solutions, for $140 million.
Later, in December 2021, Robinhood expanded its portfolio by acquiring Cove Markets, a developer focused on cryptocurrency trading platforms.
By June 2023, Robinhood had purchased X1, a credit card startup known for its no-fee, income-based rewards card, for $95 million. This product was subsequently rebranded as the Robinhood Card.
In December 2023, the company further broadened its offerings by acquiring Chartr, a publisher of daily financial newsletters.
Most recently, in March 2024, Robinhood entered the futures trading space through the acquisition of Marex FCM, a broker specializing in futures contracts.
Layoffs history
Robinhood implemented workforce reductions of 9% in April 2022. A few months later, in August 2022, it announced additional layoffs amounting to a 23% reduction in staff, primarily impacting operations, marketing, and program management departments.
In June 2023, the firm again trimmed its employee base by roughly 7%, which corresponded to about 150 job cuts.
Financing history
In September 2014, Robinhood secured $13 million in funding, lifting its total equity capital to $16 million. Notable investors included Index Ventures, Ribbit Capital, Howard Lindzon, Aaron Levie, Dave Morin, Jared Leto, Snoop Dogg, and Nas.
By May 2015, the company raised $50 million during a Series B financing round led by New Enterprise Associates.
In April 2017, Robinhood attracted $110 million in Series C funding at a valuation of $1.3 billion, increasing total investments to $176 million. Key backers included Yuri Milner from DST Global, Greenoaks Capital, and Thrive Capital.
The following year in May 2018, Robinhood closed a Series D round worth $363 million led by DST Global, pushing total equity funding to $539 million.
In July 2019, the company raised an additional $323 million through a Series E round also led by DST Global.
By May 2020, Robinhood secured $280 million during its Series F round with Sequoia Capital leading at an $8.3 billion pre-money valuation.
In August 2020, a new investor D1 Capital Partners participated in a Series G funding round totaling $200 million.
Robinhood went public on Nasdaq with an initial public offering dated July 29, 2021.
Following the FTX bankruptcy in November 2022, the U.S. government seized Alameda Research’s 7.6% stake in Robinhood that had been used as collateral for a $4 billion transfer from FTX. These shares were repurchased by Robinhood for $605 million at $10.96 per share.
Order execution
A substantial portion of Robinhood’s revenue is derived from payment for order flow, a practice it utilizes more extensively than many competitors. This approach has drawn criticism for being akin to a "backdoor commission" or kickback, with accusations that the company sends orders to market makers offering the highest payments rather than prioritizing optimal execution prices. In December 2019, the Financial Industry Regulatory Authority imposed a $1.25 million fine on Robinhood for failing to guarantee customers received the best available prices and instead favoring payments from market makers.
In December 2020, Robinhood reached a settlement with the U.S. Securities and Exchange Commission amounting to $65 million over allegations that it failed to disclose these payment arrangements and executed customer orders at prices inferior to those available elsewhere. The SEC noted that these practices resulted in customer losses totaling $34.1 million compared to best execution benchmarks from other brokers and highlighted misleading statements made by Robinhood about these policies.
During that same month, Robinhood was sued in the United States District Court for the Northern District of California for not revealing payment for order flow arrangements that allegedly caused customers to receive worse trade prices. As of January 2025, plaintiffs have sought class action status with the lawsuit consolidated under Kwon v. Robinhood Financial LLC.
Security incidents
In July 2019, Robinhood acknowledged that certain customer passwords were stored in plaintext without encryption.
By October 2020, hackers had infiltrated nearly 2,000 Robinhood accounts, resulting in unauthorized withdrawals of client funds.
A voice phishing scheme targeting a Robinhood employee in November 2021 compromised the personal information of approximately 5 million users, including email addresses, 2 million full names, and 300 birthdates. This breach has been connected to Conor Brian Fitzpatrick, the owner of BreachForums, who was apprehended in March 2023.
System malfunctions
In November 2019, a software flaw enabled Robinhood Gold subscribers to borrow unlimited funds through leveraged covered calls. The vulnerability was promptly addressed and affected accounts were suspended; however, some users experienced losses reaching six figures.
On March 2, 2020, during the COVID-19 crisis and a surge in trading activity, Robinhood experienced a platform-wide outage that blocked access to its app amid the Dow’s largest single-day point increase since 2009 and a 4.6% rise in the S&P 500. Compensation was provided on an individual basis. A subsequent significant outage occurred on March 9.
In June 2021, FINRA imposed a $57 million fine on Robinhood and mandated $13 million in restitution due to outages and misleading communications during the March 2020 disruptions—the largest penalty ever issued by the regulator. Later, in March 2023, Robinhood agreed to pay $10 million to resolve class action lawsuits stemming from trading losses caused by these outages.
Alexander E. Kearns suicide
In June 2020, Alexander E. Kearns, a 20-year-old student at the University of Nebraska–Lincoln, died by suicide after observing a negative balance of $730,000 in his Robinhood margin account following options trading activity consistent with a bull spread. This figure did not account for an offsetting position settlement. In his suicide note, Kearns held Robinhood responsible for facilitating excessive risk-taking. The company faced criticism for its slow response to his inquiries regarding the negative balance. Subsequently, Robinhood overhauled its options trading system by implementing stricter eligibility requirements, improved educational resources, and mandatory training for customers seeking options approval. Kearns’ family filed a wrongful death lawsuit against Robinhood that was eventually settled.
Regulatory challenges
In August 2022, Robinhood’s cryptocurrency division was penalized $30 million by the New York State Department of Financial Services for purported violations of anti-money laundering and cybersecurity regulations—marking the department’s inaugural enforcement action involving cryptocurrencies.
On December 16, 2020, the Massachusetts Securities Division filed an administrative complaint accusing Robinhood of breaching state securities laws by marketing services to Massachusetts investors without prioritizing their interests and failing to maintain adequate infrastructure amid rapid expansion; allegations included exploiting inexperienced investors through gamification techniques. In March 2022, Suffolk County Superior Court struck down the fiduciary duty rule underpinning parts of this case. By February 2024, Robinhood agreed to pay $7.5 million and committed to revamping its digital engagement strategies to resolve outstanding claims.
In May 2024, the U.S. Securities and Exchange Commission issued a Wells notice to Robinhood alleging securities law violations related to crypto tokens traded on its platform; Robinhood responded by asserting that cryptocurrencies do not qualify as securities and therefore fall outside securities law jurisdiction.
In September 2024, Robinhood settled claims brought by California regulators with a $3.9 million payment related to delays customers experienced withdrawing cryptocurrency between 2018 and 2022.
In March 2025, FINRA levied a $26 million fine against Robinhood Financial and Robinhood Securities for multiple rule breaches including insufficient anti-money laundering controls that impaired detection of suspicious activities such as manipulative trading and unauthorized third-party account access. Additionally, Robinhood Financial was required to provide $3.75 million in restitution to clients impacted by restricted or canceled market orders that resulted in less favorable trade outcomes.
2021 Short Squeeze Incident
On January 28, 2021, multiple brokerage platforms, including Robinhood, imposed trading restrictions on select stocks—most notably GameStop—to comply with heightened collateral demands set by its clearinghouse, the National Securities Clearing Corporation. This action followed a coordinated attempt by members of the r/wallstreetbets subreddit to significantly increase stock prices. Robinhood’s collateral obligation escalated sharply from $700 million to $3.7 billion before being lowered to $1.4 billion; failure to satisfy these requirements risked insolvency comparable to the bankruptcy of Lehman Brothers. The firm rapidly secured additional capital to meet the adjusted requirements and recommenced trading in the impacted securities on January 29.
The decision to restrict trading sparked backlash from users and political figures such as Ted Cruz and Alexandria Ocasio-Cortez. Subsequently, the House Committee on Financial Services summoned Robinhood CEO Vladimir Tenev for questioning during a hearing held on February 18, 2021.
In response to the controversy, Robinhood’s mobile application experienced a surge of negative reviews on the Google Play store. Google removed over 100,000 reviews identified as "coordinated or inorganic," yet later permitted additional critical feedback that caused the app’s rating to plummet to 1.1 stars.
Demonstrations took place outside Robinhood’s headquarters in Menlo Park, California, as well as at the offices of the U.S. Securities and Exchange Commission in Washington, D.C., and near the New York Stock Exchange.
On January 28, a class-action lawsuit was initiated against Robinhood in the Southern District of New York, accusing the company of market manipulation and conspiracy with market maker Citadel Securities to limit open market trading, allegedly violating antitrust regulations. This lawsuit was dismissed in November 2021 due to insufficient direct evidence and Robinhood’s terms of service allowing trading limitations. The dismissal was upheld by an appeals court in 2024.