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#RobinhoodTraders #robinhood

The free stock trading app valued at $11.2 Billion is the hottest Stock broker in the world in 2020
With 10 Million active users and record 4.31 million daily average revenue trades recorded in June 2020
it’s clearly the Saas business of the year 2020.
But the big news is Robinhood “doesn’t charge fees”
It offers commission free stock, ETF and options trades
How does Robinhood earn its revenue if it doesn’t charge its customers to buy and sell and trade equities
Robinhood sells the retail order flow to high frequency traders (HFT) and Market Makers
Market makers make money on the spread between the bid and the ask
Market makers provide liquidity to the market, which means they take the other side of trades.
These traders could then use HFT algorithms to frontrun the trades, which would massively accentuate the retail momentum.
@CSCareers ( citadel securities) and @VirtuFinancial ( Virtu Financial Inc) are the two biggest market makers who buy retail orders from Robinhood
The company generates significant income from payments for order flow, a common although controversial practice whereby a broker receives compensation and other benefits for directing orders to different parties for trade execution.
Robinhood refers to this revenue as "rebates from market makers and trading venues.
Independent analysis suggests that payments for order flow generated an estimated $69 million in revenue for Robinhood in 2018
Robinhood PFOF ( payment for order flow) business probably brings in around $150M - 250M annually.
A company that directs billions of dollars in trades to market makers can earn substantial amounts.
Robinhood payment for order flow was $180.1 million for Q2 2020 , double what it took for the prior three months, according to a regulatory filing
and it expects revenue to hit $700 million this year, a 250% spike from 2019.
Robinhood has sold the world a story of helping the little guy that is the opposite of its actual business model: selling the little guy to rich market operators with very sharp elbows.
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