If you are an investor—whether you’re just starting out or have years of experience—you’re likely familiar with Robinhood. This app-based investing platform has gained immense popularity among retail investors, particularly those who engage in discussions on online forums like Reddit’s r/WallStreetBets. Currently, Robinhood boasts approximately 14.4 million monthly active users, reflecting its significant impact on the trading landscape.
Since its launch in 2013, Robinhood has attracted a following, particularly during the COVID-19 pandemic, which saw a surge in everyday traders and a boom in cryptocurrency investments. It provides commission-free trading, allowing users to invest in a wide range of assets, including exchange-traded funds (ETFs) and Dogecoin, without needing to go through traditional brokerages or crypto exchanges.
The company made its public debut in July 2021, trading on the Nasdaq under the ticker symbol HOOD. In the second quarter of 2021, Robinhood’s revenue soared to $565 million, driven significantly by an increase in crypto trading. By its second-quarter earnings report for 2025, the revenue had impressively climbed to $989 million.
With the stock market experiencing a robust bull market that commenced in October 2022, trading platforms like Robinhood have witnessed a significant uptick in user activity. However, despite its growth trajectory, Robinhood has faced its share of criticism.
In June 2021, the company was subjected to the largest financial penalty ever imposed by the Financial Industry Regulatory Authority (FINRA), agreeing to pay $70 million due to various regulatory issues, including system outages and misleading users about trading options—a risky investment move—when it was inappropriate to do so. In early 2021, Robinhood limited users’ ability to trade certain meme stocks like GameStop and AMC, which stirred outrage among U.S. traders and lawmakers.
In December 2020, Robinhood was penalized $65 million by the Securities and Exchange Commission (SEC) for allegedly misleading customers regarding one of its revenue streams. This revenue model, known as “payment order flow,” involves sending customer orders to high-frequency trading firms in exchange for cash payments.
The platform’s model enables users to execute trades without incurring costs, but according to financial planner Tara Falcone, this can lead to significant drawbacks. “It’s led many individuals to believe that this is the correct method for investing and wealth accumulation,” Falcone explains. “While trading individual stocks is one avenue to build wealth, it’s often not the best starting point for most young investors.”
Here’s everything you need to understand about this trendy yet contentious trading app, including insights into whether you should consider using it.
Who are the primary users of Robinhood?
The Robinhood app attracts a significant number of young and novice investors. It has been particularly effective at appealing to younger demographics, offering incentives such as $15 for college students who sign up for a new account, along with gamified features, fractional shares, and access to alternative assets like cryptocurrency.
Critics argue that Robinhood’s gamification of investing can be perilous, as overtrading may lead to serious financial consequences. In response to this feedback, the company has taken steps to mitigate risks, such as eliminating its digital confetti feature.
However, Robinhood isn’t just for those with a higher risk tolerance who frequent Reddit. The app can serve as a valuable entry point into investing for individuals willing to conduct their own research. Users can trade a variety of assets, including stocks, bonds, ETFs, and cryptocurrency, as well as utilize the gifting feature to transfer coins and tokens to others. Nonetheless, it is essential to recognize that even the savviest stock pickers often struggle to outperform the market over extended periods. This is why many financial experts recommend that new investors begin with passively-managed index funds that have established track records—one of the most reliable, albeit less exciting, paths to wealth accumulation.
Ultimately, predicting the future movements of the stock market is fraught with uncertainty. Day traders often attempt to exploit market inefficiencies, even though achieving substantial profits this way is typically very challenging. The fact that Robinhood allows anyone with a bank account to buy and sell high-risk financial products only amplifies its appeal.
Recently, Robinhood has shifted its focus towards attracting long-term investors. The platform now offers an individual retirement account (IRA) that features a 3% match under specific conditions. This match is available to subscribers of Robinhood Gold, who pay a monthly fee of $5. The matching feature of the Robinhood IRA is comparable to the employer-sponsored retirement plan matches commonly seen in 401(k) plans.
What are the best practices for using Robinhood?
Before downloading any investing app, it’s crucial to clarify your motivations, advises Falcone. Are you interested in making quick profits? Are you experiencing FOMO influenced by Reddit? Or do you want to invest responsibly and consider long-term strategies?
“Understanding your motivations will help you filter out distractions from social media or peer influences,” Falcone notes. “If certain types of stocks don’t align with your strategy, you’ll know to disregard those suggestions immediately.”
If you’re adopting a financial planning approach, ensure that you have settled any high-interest credit card debts and consumer loans. Also, contribute sufficiently to your employer-sponsored plan to maximize potential matching benefits—this is an immediate return on investment that you can’t expect from the stock market.
“Once you’re on track for retirement and have extra funds to invest, consider incorporating individual stocks into your portfolio,” Falcone suggests. “However, it’s advisable to secure your financial future through diversified securities first, either via your employer’s plan or an IRA.”
Additionally, set clear investment goals before diving into trading, Falcone recommends. You might want to invest for a new couch, a vacation, an engagement ring, or a down payment on a house.
“Assess the total cost of achieving your goal, the timeline you have to reach it, the amount you can invest today, and the contributions you’ll need to make weekly or monthly to achieve that goal, factoring in a realistic expected return for your timeframe,” Falcone elaborates.
How to initiate your investing journey with Robinhood
Getting started with investing through Robinhood is straightforward—simply open an account. You must be at least 18 years old, have a valid Social Security number, and reside at a U.S. address.
If you’re new to the world of investing, it’s wise to start with a small sum of money that you are comfortable losing, focusing on stocks and ETFs for your initial investments. Thanks to fractional shares, you can begin investing with just a few dollars. As you start, Falcone encourages familiarizing yourself with investment news platforms (such as Money.com) and following reliable financial planners like herself for timely insights. Morningstar.com is another excellent resource for staying informed about fund performance, investment strategies, and associated fees.
You might also consider using a stock market simulator to develop a “practice portfolio,” which will equip you with knowledge about market fluctuations over time and help you cultivate healthy investing habits, such as not obsessively checking your account multiple times a day.
In essence: Learn to walk before you run, and take the necessary time to comprehend what you are truly buying and selling.
This story has been updated to ensure the information regarding Robinhood’s offers and features is current.
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