Ava AbbottRobinhood Markets is a financial services company based in Menlo Park, California. The company was founded in 2013 by Vladimir Tenev and Baiju Bhatt. Robinhood launched its mobile stock-trading app in 2014, making it the first brokerage platform to offer commission-free investing to the masses.
The service is free to use, which is enticing for younger investors. Seasoned investors can use Robinhood Gold, a paid account with higher deposit limits and more trading options.
In 2020, Robinhood raised $280 million in venture funding and $200 million for Series G funding at a valuation of $8.3 billion. The company has around 1280 employees and manages over $81 billion in assets. [1]
At the start of 2021, the platform grew in popularity and notoriety for playing a central role in the GameStop affair. This event led to a congressional grilling of Robinhood CEO Vladimir Tenev.
In June 2021, Robinhood agreed to pay a $70 million fine imposed by FINRA for misleading customers. Robinhood is scheduled to go public in 2021 and revealed skyrocketing revenue in its offering prospectus.
The company had 13 million users and was valued at $20 at the end of 2020. By Feb 2021, Robinhood doubled its valuation to $40 billion and gained 6 million users to 19 million. But it is facing stiff competition from other trading apps. To protect its market share and growth, Robinhood has to fend off top competitors and alternatives. [2]
1. WeBull
Year founded: 2017
Headquarter: Changsha, Hunan, China
WeBull is a Chinese-owned investing app that offers commission-free trading, including stocks, exchange funds, options, margins, and cryptocurrencies. The app was released in May 2018 and received SEC approval in May 2020.
By October 2020, Webull had over 11 million registered users and 750,000 daily active users. WeBull is accessible via iOS and Android mobile app and desktop computer, while Robinhood is mobile-only.
WeBull is aiming to duplicate Robinhood’s approach to gamified app investing. Like Robinhood, WeBull also played a role in the GameStop affair. The app attracted 952,000 users in a single day and was downloaded by 1.2 million people within a week. Robinhood and WeBull both began IPO talks in June 2021.
WeBull’s US IPO could raise about $300 million to $400 million. Robinhood is valued at a whopping $40 billion, forty times WeBull’s $1 billion valuations. WeBull is one of the fastest-growing trading platforms in the US and the perfect Robinhood alternative. [3]
2. TradeStation Group, Inc.
Year founded: 1982
Headquarter: Plantation, Florida
TradeStation Group is an online brokerage company that offers commission-free stock and options trading. This easy-to-use trading platform provides more investable classes than Robinhood. With TradeStation, users can trade securities, futures, mutual funds, bonds, and cryptocurrency.
The app has 2 offerings, TS GO and TS Select. TS GO is an exclusively mobile-only platform that allows users to trade on the go.
In the Stock Brokers 2021 Online Broker Review, TradeStation was awarded the “#1 Platform Technology” for the ninth year. It also won “Best in Class” accolades in five categories.
In June 2021, TradeStation reduced its price plan and cryptocurrency taker fees by up to 50%. And it doesn’t charge users for crypto custody, deposits, or withdrawals. With over 30 years in the field, TradeStation is one of the most experienced Robinhood competitors. [4]
3. SoFi (Social Finance)
Year founded: 2011
Headquarter: San Francisco, California
Social Finance, popularly known as SoFi, is an online finance company. It offers stock and cryptocurrency trading, loans, and wealth management services. SoFi allows users to refinance their student loans and does not have an account minimum.
These features make it the best Robinhood alternative for young investors. SoFi has 1,383 employees and made $621 million in revenues for 2020. It has raised $3.7 billion since it was founded.
In May 2021, SoFi went public by merging with Social Capital Corp V. The company’s stock surged more than 12% to $22.65 within a month. It forecasts a net revenue of $980 million in 2021 and $3.7 billion in 2025 after impressive IPO results.
The company is valued at $5.7 billion. It is the only trading app that offers a comprehensive suite of products on one mobile platform. SoFi is Robinhood’s top competitor. [5]
4. TD Ameritrade
Year founded: 1975
Headquarter: Omaha, Nebraska
TD Ameritrade is an electronic trading platform. It allows users to trade stocks, futures contracts, exchange-traded funds, forex, options, cryptocurrency, funds, margins, and more. In 2019, the company eliminated commissions and increased its trading options to surpass Robinhood.
It manages around $1.5 trillion in assets and provides custodial services to over 7,000 registered investment advisors. In Nov 2019, Charles Schwab acquired TD Ameritrade in a deal valued at $26 billion. Before the acquisition, it generated around $5 billion in revenues annually.
The platform executes more than 3 million revenue trades daily. It also offers market analysis and educational programming via TD Ameritrade Network. In Jan 2021, TD Ameritrade partnered with Amazon Fire TV, SLING TV, VIZIO Smart Cast, and DistroTV.
This partnership gives its 13 million retail investors easy access to investing services and educational material. TD Ameritrade is the leading platform for retail trading in the US. It is the best alternative to Robinhood for retail investors. [6]
5. M1 Finance
Year founded: 2015
Headquarter: Chicago, Illinois
M1 Finance is a robo-advisory investment and stock-trading platform. With M1’s hybrid platform, users can trade common stocks, preferred stocks, and fractional-share ownership. It suggests high-potential opportunities using a “pie” system with up to 100 investment “slices.” In 2021, M1 Finance has 250 employees and is valued at $1.45 billion.
In 2021, M1 Finance raised $75 million for Series D in March and $150 million for Series E four months later. The financing round takes its total to over $300 million. M1 Finance’s AUM (assets under management) increased more than fivefold within 18 months.
From early March to July 2021, its AUM rose from $3.5 billion to $4.5 billion. M1 Finance’s increasing popularity among first-time investors makes it a formidable competitor for Robinhood. [7]
6. Public
Year founded: 2017
Headquarter: New York, NY
Public.com is a social investing app that allows users to invest in companies commission-free. It offers fractional shares of stocks and ETFs. The platform doubles as a social network where users can follow, interact, and share ideas with other investors.
The main advantage of Public.com over Robinhood is its fractional shares. Unlike Robinhood, Public.com users can buy small portions of stock for as little as $5. They can invest any amount of money, making it ideal for beginners. The company currently has one million members on its platform.
Public.com raised $220 million in Feb 2021, bringing its valuation to $1.2 billion. It has raised about $310 million since its inception. The company will use the funds to add crypto, pre-market, and post-market trading to its platform. These features will increase its competitive edge over Robinhood. [8]
7. eToro
Year founded: 2007
Headquarter: Tel Aviv, Israel
Israel-based eToro is a social trading and multi-asset brokerage company. It is the world’s leading social investing platform with registered offices in Israel, the US, the UK, Australia, and Cyprus. This online brokerage app is available in more than 140 countries and allows users to trade stocks and over 17 cryptocurrencies for free.
In March 2021, eToro began talks to go public via a $10.4 billion merger with FinTech Acquisition SPAC. This move can help the online brokerage company to compete with Robinhood and other rivals.
The trading platform gained 5.2 million new users in 2020 and now has more than 20 million users. It also added seven new cryptocurrencies on its platform to meet rising demand, including dogecoin. Its revenue for fiscal 2020 was around $600 million and valued at $2.5 billion. eToro is the best Robinhood competitor and alternative crypto trading. [9]
8. Coinbase
Year founded: 2012
Headquarter: No headquarters (adopted Remote First in 2021)
Coinbase is the leading online platform for trading cryptocurrencies. Users can invest in different cryptocurrencies, send and receive Bitcoin securely, and access the broader crypto-economy. The company has 1249 employees and 56 million users on its platform.
In April 2021, Coinbase went public via a direct listing of its stock. However, 90% of Coinbase’s revenues come from crypto-trading fees. So, its stock price is susceptible to the price volatility of cryptos like Bitcoin and Dogecoin.
Bitcoin dropped more than 50% from Apr to Jun 2021, wiping out 35% of Coinbase’s shares. But its comprehensive crypto offering makes it the best Robinhood alternative for crypto-trading. [10]
9. E-Trade
Year founded: 1982
Headquarter: Arlington, Virginia
E-Trade is an online brokerage platform that allows users to trade stocks and ETFs. It has three platforms, Power E-Trade for real-time data, E-Trade Web for live market analysis, and E-Trade Pro for strategy scanners.
All three are free and have no minimum investment limit. It also offers retirement investment accounts for a small fee. In Oct 2020, Morgan Stanley acquired E-Trade.
E-Trade was among the fast-growing platforms in early 2020 but has lost some steam due to legal issues. Several E-Trade customers sued the company for failing to protect their interests in April 2020 when crude oil futures fell below $0 for the first time.
Although a San Francisco federal judge dismissed customers’ lawsuit, the case eroded trust and tainted E-Trade’s reputation. [11]
10. Tradier
Year founded: 2014
Headquarter: Charlotte, North Carolina
Tradier is an online brokerage platform that provides financial asset trading, account management, and market data. The app has a robust API that enables businesses and developers to create and offer embeddable investing to investor platforms and digital robo-advisors globally. Unlike Robinhood, Tradier integrates with several third-party applications that allow for customization.
In March 2021, Tradier acquired Houston-based Rho. The Rho mobile platform is a commission-free trading app designed for veteran investors looking for advanced features than Robinhood. This acquisition makes Tradier one of Robinhood’s top competitors and alternatives. [12]
References & more information
- Bloomberg (2021, Jun 9). Online Broker Webull Considers $400 Million U.S. IPO. Bloomberg
- TradeStation (2021, Jan 21). TradeStation Group Subsidiaries Rated “#1 Platform Technology” for the Ninth Consecutive Year. PR Newswire
- Bursztynsky, J. (2021, Jun 1). SoFi stock closes up more than 12% after its debut on the NASDAQ. CNBC
- Farrell, M. (2021, Jan 1). TD Ameritrade Network kicks off 2021 with unprecedented momentum. Business Wire
- Azevedo, M. (2021, Jul 14). M1 Finance raises $150M in SoftBank-led Series E, boosts valuation to $1.45B. Tech Crunch
- Podder, S. (2021, Feb 17). Robinhood rival Public.com raises funds at a $1.2 billion valuation as retail trading booms. Reuters
- Lee, I. (2021, Jun 3). eToro added 3.1 million users in the 1st quarter, a 210% rise driven by retail investors and crypto bulls. Business Insider
- La Monica, P. R. (2021, Jun 22). Coinbase plunges along with bitcoin and the rest of crypto. CNN
- Godoy, J. (2021, Jun 25). E-Trade beats lawsuits over oil futures trading outage. Reuters
- Tradier (2021, Mar 18). Tradier Announces the Acquisition of Popular Commission Free Mobile Trading App Rho. PRNewswire
- Featured Image by Clay Banks
Kevin Johnson
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