Good read on Robin Hoods business model
Value Proposition: Robinhood is a fintech company that lets you trade stocks for free. Without a physical footprint, Robinhood has a cost structure advantage over players like Scottrade and Fidelity (who charge between $7–8 a trade). Robinhood makes the majority of their revenue by routing orders through Apex Clearing, Citadel, KCG, and Two Sigma. These are all high frequency trading firms. When detractors talk about Robinhood, this is the main source of controversy around the company. How do you make money?I think people intuitively know that if something is free, there’s usually an exchange further down the line. If there’s a website, there’s an advertisement. If flight tickets are inordinately cheap (like Spirit), we intuitively know we’re making a trade off. So it’s pretty natural to ask, how does a free trading app make money?
unknownx500
