What is Robinhood? All You Need to Know About the Company

What Does Robinhood Offer 2024?

Robinhood offers a wide range of services and markets.

The Pros of Robinhood

There are a few pros to using Robinhood as a trader:

• There are no fees or commissions per U.S. stock, ETF, or crypto trade.

• There is no account minimum.

• The platform offers many promotions, usually in the form of free stock up to $225 for new accounts.

• For margin accounts, no interest is charged on the first $1,000 of debt for Robinhood Gold users.

• Robinhood enforces no withdrawal fees or minimum deposit fees.

• Opening a digital account is usually fast and simplistic.

• 0% trading fees are quite attractive.

• It’s ideal for day trading and cryptocurrencies.

• The interface is very streamlined and much easier for newbies to use when compared to more robust online broker platforms.

• It offers cryptocurrency trading.

• Day trading is not limited by any pattern day trading rules.

• Users can instantly make deposits of up to $1,000. Robinhood Gold allows for an instant deposit of up to $50,000.

• Margin accounts can provide immediate access to stock sale proceeds.

• Robinhood is ideal for those using a buy and hold strategy.

• It’s ideal for individual taxable accounts and margin accounts.

• Robinhood does not enforce any annual, ACH transfer, or inactive account fees.

The Cons of Robinhood

Unfortunately, no broker is perfect. Robinhood does have a few glaring flaws that might turn off potential traders:

• Cryptocurrency cannot be transferred in or out of one’s account.

• Robinhood does not offer mutual funds or bonds, which many similar online brokers and platforms do.

• It can be very difficult to get to trade options on the platform, depending on your location.

• The platform does not offer retirement accounts of any form.

• Their customer support is notably limited and not very good.

• While the platform is pretty good about not fining users, it does charge a $75 ACAT outgoing transfer fee.

• The product range is pretty weak.

• While there is no account minimum, there is an account minimum of $1 for fractional shares and $2,000 for gold.

• Robinhood is not available to those outside of the United States, which makes it quite limited.

• The platform does not offer very much in the way of investing research or helpful trading tools. If a trader wants access to such perks, they will need to pay $5 per month for a Robinhood Gold account.

• It’s ideal for commission-free trades and mobile investing ability but has few use cases outside of that.

• Cash accounts don’t get an instant deposit and typically takes about five days for a money transfer to complete.

• One of the biggest disadvantages of Robinhood is its lack of reliability. The platform has received quite a bit of criticism for outages, trade restrictions during market volatility, and misleading information on the platform that has lead to some users being fined.

• While the tradable securities available are good enough for many investors, they are limited when compared to similar online brokers.

• The platform does not offer joint accounts or education savings accounts.

• Surprisingly, the platform does not offer automatic transfers upon the death of a user or allow for users to name beneficiaries in such situations.

• The platform does not offer demo accounts, which is a downside for beginners who want to experiment before really trading.

Is Robinhood Safe?

The short answer: Yes, Robinhood is a secure and regulated online broker. Despite the platform being well-liked among traders, many traders might still want to know if the Robinhood platform is a legitimate broker, or whether the platform is safe to use.

Robinhood is regulated by the SEC and FINRA. The platform ensures that all vital legal information is available on the website itself. Plus, there are many positive reviews about the online broker (at least when it comes to safety) and it boasts a high positioned rating on Traders Union, which is quite reputable.

Robinhood has gotten in trouble for being fairly unreliable in the past. Hopefully, as the platform becomes more popular, this unreliability with their platform will improve.

What is Robinhood’s IPO?

Back in January 2023, Robinhood announced to users that it would be pricing its IPO, or initial public offering, at about $38 per share. This was at the low end of the estimation. With over 22.5 million users, that would value the platform at about $32 billion.

Many users were uncomfortable with buying this stock, even dedicated traders who loved the platform. Namely, many were concerned that Robinhood’s popularity would wane as the pandemic came to an end. Many named the long-passed retail investor explosion as one reason to be suspicious about the platform’s growth. Others found that Robinhood’s no-fee business model was only possible because of PFOF. Today, that IPO is priced at around $41 and fluctuates quite a bit.

So is it worth buying Robinhood’s IPO? It’s tough to tell. The platform has sustained its popularity up to the point, but many are distrustful of the platform due to its shady dealings during the GameStop trading mania. It’s uncertain how well the platform will perform in the stock market as we near 2023.