Free stock-trading mobile app Robinhood has hit a major milestone in its five years in operations: it has surpassed E*TRADE in terms of customers. In a blog post announcing that it recently raised $363 million in capital, giving it a valuation of $5.6 billion, Robinhood revealed that it has reached more than 4 million users. The $363 million in venture funding came via a Series D round led by DTS Global and included new investors Iconiq, Capital G, Sequoia Capital and Kleiner Perkins. Existing investors NEA and Thrive Capital also took part in the round of fundraising.
"In the past few months, we launched more products to further our mission of democratizing financial services, and brought your investments together on one platform," Robinhood wrote in the blog post. "We released a web platform with research and discovery tools, introduced commission-free options trading, and launched Robinhood Crypto, with commission-free cryptocurrency trading, now available in 10 states." The company said that it will use the capital it raised to accelerate its product expansion, invest in its infrastructure and operations, and hire more staffers.
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In an interview with CNBC, Robinhood's co-founder and co-CEO Baiju Bhatt said that the roll-out of cryptocurrency trading in April has fueled some of the growth in new customers. The ability to trade bitcoin and ethereum through the mobile trading app is available in 10 states. "I think the rate at which more traditional tech companies are disrupting finance is interesting to see," Bhatt said. "As it stands, we're leading the pack; we're excited about accelerating that."
When it comes to online trading, Robinhood faces a lot of competition from established players. One of its biggest rivals, E*TRADE Financial Corporation (ETFC), which also has mobile trading and enables customers to trade cryptocurrencies via the CME and CBOE futures, ended the March quarter with 3.7 million brokerage accounts, under the more than 4 million Robinhood had.
But that doesn't mean E*TRADE is struggling. After all, the New York-based online brokerage ended the March quarter with a 3% increase in net new brokerage accounts, adding 59,685, and net new brokerage assets of $5.3 billion. What’s more, as of the end of the first quarter, it had $392.8 billion in customer assets. Daily average revenue trades (DARTs) of 309,000 marked a company record, as did derivative DARTs of 98,000. DARTs provide a way to measure the performance of a brokerage because they show investors' willingness to invest in stocks.