Robinhood is about to sell its own stock on Wall Street, the very place the online brokerage has rattled with its stated goal of democratizing finance. Through its app, Robinhood has introduced millions to investing and reshaped the brokerage industry.
FILE - This Dec. 17, 2020, photo shows the logo for the Robinhood app on a smartphone in New York. After a rocket rise where it introduced millions of people to investing and reshaped the brokerage industry, all while racking up a long list of controversies in less than eight years, Robinhood is about to take the leap itself into the stock market. Robinhood Markets and three of its executives are selling up to 60.
Through its app, Robinhood has introduced millions to investing and reshaped the brokerage industry, all while racking up a long list of controversies in less than eight years. Still, it’s a huge moment for the fast-growing company based in Menlo Park, California, which is reserving many of the shares for its own customers, rather than just big professional investors.
But legal experts say tighter regulation may be difficult to bring about. Brokerages need to make money somehow, and if Robinhood can’t get it from payment for order flow, it could go back to charging trading commissions, said Joshua Mitts, a law professor at Columbia University. That could make politicians even less popular than they already are.
Among other risks, Robinhood’s customers could spend less time on the app if a fading pandemic means they can go on with their lives and do other things with money.
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