The revenue of Robinhood increased several times in the first quarter as it submitted applications to market makers for stock trading operations. As reported by the Wall Street Journal, the online broker’s reporting documents demonstrated this situation. The business, which contributed $331 million in revenue in the first three months of 2021 against $91 million in the same period last year (263% growth), contributed to the Robinhood’s growth by over 267% same period.
Robinhood secured $ 2.4 billion in funding through a round of funding closed in January. A few days earlier, the firm raised another $1 billion. WSJ notes that rapid growth in revenue and user base could attract investors before the Robinhood’s expected IPO in 2021.
In early 2021 a shortage of funds caused Robinhood to halt trading on some stocks, which went up amid Reddit conversations between investors. Robinhood needs money to keep the app active — the more people use it, the more funds the Robinhood needs from clearing firms to fund transactions.
Robinhood encountered customer dissatisfaction after the restriction, and shareholders filed a class-action lawsuit against the startup. Meanwhile, police received ten reports during one week relating to vandalism and attempted break-ins around the Robinhood’s California headquarters.
WSJ writes that the scandal has not hurt the broker’s business. In February, Robinhood’s monthly payments for applications rose to $ 121 million from $ 111 million.
In addition to ticket revenues, Robinhood also has paid services such as Robinhood Gold, but subscription revenues remain its most significant source of income.
Robinhood has agreed to pay US$ 65 million to settle the Securities and Exchange Commission (SEC) dispute in December 2020. During that same period, the regulator accused the Robinhood of concealing client information about its sales to investment firms and conducting deals at unfavorable prices for investors. There has been no acceptance or denial of Robinhood’s allegations by the regulator.