Robinhood launched on May 1, 2015

Robinhood opened to the public on May 1, 2015, as a mobile-first brokerage app. The company was founded by Vladimir Tenev and Baiju Bhatt, who started building it in 2013. The app launched first on iOS, then added Android support later that year. From the start, Robinhood's main selling point was zero commission on stock and exchange-traded fund (ETF) trades — a feature that was unusual at the time, when most brokerages charged $5 to $10 per trade.

The app was designed to be straightforward and fast. You could open an account on your phone, fund it, and buy stocks within minutes. Robinhood did not require a minimum account balance to start trading, which made it accessible to people with small amounts of money to invest. The company made money through other means: interest on cash held in accounts, premium subscription fees for advanced features, and payment for order flow (selling information about customer trades to market makers).

Key Takeaways

  • Robinhood began trading on May 1, 2015, and was one of the first brokerages to offer commission-free stock trades on a mobile app.
  • The platform was built to be fast and straightforward, with no minimum account balance required to open an account.
  • Robinhood's zero-commission model eventually forced other major brokerages like Fidelity, Charles Schwab, and E-Trade to eliminate their own trading commissions.
  • The company expanded over time to offer options trading, cryptocurrency trading, and other investment products beyond stocks and ETFs.
  • Robinhood went public in July 2023 with a stock ticker symbol of HOOD, though it had been operating as a private company for eight years before that.

How Robinhood changed the brokerage industry

Before Robinhood launched, paying a commission on every trade was standard. If you wanted to buy 10 stocks, you paid 10 commissions. This meant small investors often lost money just to the fees themselves. Robinhood's zero-commission model put pressure on established brokerages to compete. Within a few years, Fidelity, Charles Schwab, E-Trade, and others all dropped their trading commissions to zero.

The shift also changed who could afford to trade stocks. Younger investors and people with less money could now buy individual stocks without worrying that fees would eat into their returns. Robinhood's straightforward interface and mobile-first design appealed to people who had never used a brokerage before. The app became popular quickly, and by 2020, Robinhood had millions of users.

What Robinhood offered in its first years

When Robinhood launched in 2015, it offered stocks and ETFs only. You could buy and sell shares of public companies and track your portfolio on your phone. The app showed real-time stock prices and let you set up alerts when a stock price hit a certain level. Trading happened during regular market hours (9:30 a.m. to 4 p.m. Eastern Time on weekdays).

In 2016, Robinhood added options trading, which lets you buy and sell contracts that give you the right to buy or sell a stock at a set price. Options are more complex than stocks and carry higher risk. In 2018, Robinhood added cryptocurrency trading, so users could buy and sell Bitcoin and Ethereum directly in the app. Each new product expanded what Robinhood offered, though the core appeal remained the same: low or no fees and a straightforward mobile interface.

Robinhood's path to going public

Robinhood remained a private company for eight years after its launch. During that time, it raised money from venture capital investors and grew its user base. The company faced several challenges: regulatory investigations, lawsuits from users, and criticism over how it made money through payment for order flow. In July 2023, Robinhood went public on the NASDAQ stock exchange under the ticker symbol HOOD. This meant the company itself became a publicly traded stock that anyone could buy or sell.

Going public allowed Robinhood's founders and early investors to sell their shares and gave the company access to more capital. It also made Robinhood's finances and operations more transparent, since public companies must file regular reports with the Securities and Exchange Commission (SEC).

How Robinhood makes money today

Robinhood still does not charge commissions on stock and ETF trades. Instead, it generates revenue through several channels. Payment for order flow is the largest source: when you place a trade, Robinhood sells information about that trade to market makers (large firms that buy and sell stocks constantly). Market makers pay Robinhood for this data because it helps them predict price movements and manage their own risk.

Robinhood also offers Robinhood Gold, a paid subscription tier that gives you access to margin (borrowing money to buy stocks), extended trading hours, and premium research tools. Some users also hold cash in their Robinhood accounts, and Robinhood earns interest on that cash before paying a portion of it back to users. Cryptocurrency trading and options trading also generate revenue through spreads (the difference between the buy and sell price).

Robinhood's impact on retail investing

Robinhood's launch coincided with a broader shift toward retail investing — ordinary people buying stocks on their own rather than through financial advisors or mutual funds. The app made it straightforward for younger investors to start trading, and social media communities like Reddit's r/wallstreetbets used Robinhood to coordinate large trades. This visibility peaked during the GameStop and AMC stock rallies in 2021, when millions of retail investors used Robinhood to buy shares of these companies.

The 2021 rallies also exposed some of Robinhood's limitations. During periods of extreme trading volume, the app experienced outages and delays. Robinhood also restricted trading on certain stocks during the GameStop rally, a decision that sparked controversy and led to congressional hearings. These events highlighted both the power of retail investors using apps like Robinhood and the risks of trading without professional guidance.

Frequently Asked Questions

Did Robinhood really invent commission-free trading?

Robinhood was not the first to offer commission-free trading, but it was the first to make it mainstream on a mobile app. Some brokerages had offered commission-free trades before 2015, but they typically required high minimum balances or limited which stocks you could trade. Robinhood's model — zero commissions for everyone, no minimum balance, and a straightforward mobile app — forced the entire industry to change.

Can you still use Robinhood today?

Yes. Robinhood is still operating and has millions of active users. You can read the app, open an account, and start trading stocks, ETFs, options, and cryptocurrency. The basic features remain free, though some advanced features require a paid subscription. The app is available on iOS and Android.

What happened during the GameStop trading restrictions in 2021?

In January 2021, Robinhood restricted trading on GameStop and several other stocks that were being heavily bought by retail investors. The company said it made this decision to manage risk and comply with regulatory requirements, but users and lawmakers criticized it as unfair. Robinhood later lifted the restrictions and settled lawsuits related to the incident, though the controversy remains a significant moment in the company's history.

How is Robinhood different from traditional brokerages?

Robinhood is mobile-first and designed for speed and simplicity, while traditional brokerages like Fidelity and Charles Schwab offer more research tools and customer service options. Robinhood makes money primarily through payment for order flow, while traditional brokerages rely more on advisory fees and account management services. Both offer similar products today, but they target different types of investors.