Robinhood, the fastest growing brokerage ever, is making plans to go public. Last year the company raised $110 million Series C at a $1.3 billion valuation and now the company has raised $363 million Series D at a $5.6 billion dollar evaluation.In a recent interview with Tech Crunch the companies CEO, Baidu Bhatt announced that they are working toward an IPO and has started a search for a chief financial officer. One of the reasons Bhatt believes that his company can compete with more established brokerages is that fact that their company is very lean. For example, Robinhood has only 250 employees compared to a company like ETrade with 4,000.
Robinhood now has over 5 million customers using it’s services. The company has seen tremendous growth with younger customers due to the fact that it offers free trades on stocks and cryptocurrency. How does a company that offers free trades make money you might ask? Robinhood makes money by offering subscriptions to their optional “Robinhood Gold” service, which is a margin account. In addition to the margin accounts the company has revenue streams from interest on the money held in their customers accounts. It also sells order flow to stock exchanges for trades.