Estimated valuation: $5.6 billion

Product: Mobile stock/ETF trading platform

IPO Timeline: TBD

Date Founded: 2013

Robinhood wants to level the financial markets playing field with its free stock and ETF trading platform. It was founded by Stanford roommates Vladimir Tenev and Baiju Bhatt who initially built trading platforms for major international financial institutions. Their experience illuminated that it’s essentially free for an institution to place an electronic trade—and that the customer is charged up to $10 for that transaction. This is what motivated the duo to create Robinhood, which now boasts 5 million users. It has received $539 million in funding in five rounds from 35 investors.

In September 2018 the company said it is looking to go public in the "medium to long-term." It is also working on getting regulatory approval to operate in Australia.

Robinhood's Secret Free Sauce

Robinhood is a mobile investment trading platform that doesn't charge fees or commissions. It supports most U.S equities and exchange traded funds (ETFs) listed on major U.S. exchanges, and it introduced cryptocurrency trading in February 2018.

There are certain types of securities you can’t trade on Robinhood: most foreign domiciled securities (except some Canadian and Israeli stocks trading at $5 or more), OTC equities, options, preferred stocks, tracking stocks, warrants, mutual funds, bonds, and currencies. Robinhood also doesn’t provide access to IPOs.

While pre- and after-market trading was earlier only available to Robinhood Gold users, the company made extended market hours available to all users in August 2018.

Robinhood supports typical order types including market, limit, stop limit and stop orders. Certain orders may also be created as good for the day or good till canceled (GTC). At present, the firm doesn't offer short selling but hopes to add it in the future.

Using the app is reasonably intuitive. Tap on the buy button on your watch list or the stock’s profile page. Next, tap on “order types” to choose your order type. Confirm the order and, finally, swipe up to submit. To sell, swipe left on the stock or tap to sell from the stock’s profile page.

Robinhood's Premium Service

Robinhood rolled out additional investing opportunities with its Robinhood Gold platform. Continuing its mission to democratize trading, its add-on is a premium margin account and strives to create a simple and cost-effective tool for advanced stock market investors. Robinhood Gold costs $10 a month for the initial tier, with higher price points for greater buying power. Users have access to additional features including bigger instant deposits from bank accounts. Robinhood Gold also offers instant settlement instead of waiting several days to reinvest funds after selling shares or transferring from a client's bank.

Robinhood Gold Buying Power is the money loaned to users to buy stocks, and it cannot be used to buy options or cryptocurrencies. It is included with the monthly fee and using Gold Buying Power costs no fees or interest charges on top of the fixed monthly charge of the tier you select. The flat monthly fee makes using leverage more transparent. You can invest using Gold Buying Power up to twice the value of your account. There are additional caveats of this feature listed on the Robinhood website.

Investors should be aware that investing on margin is a risky practice and only the most sophisticated traders should do it. (For related reading, see: How Robinhood Makes Money.)

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