After FinTech firms find their footing, it is common for them to then expand their operations to new countries and regions. Sadly, it seems that this will not necessarily be the case for Robinhood, a trading platform dealing in traditional and cryptocurrency assets. The company announced on July 21, 2020, that its planned expansion to the UK had been postponed.
Robinhood Backs Out From the UK
The news was formally announced via emails from the company. And it was confirmed that its expansion had been postponed indefinitely. This development was attributed to the changes that have taken place globally in the last few months, many of which can be attributed to the COVID-19 outbreak.
The company stated that they were reasoning to those changes and, as such, would be redirecting their efforts. This involves more resources being put into strengthening the core business of Robinhood in the United States. Furthermore, more investments will be put into the company’s foundational systems moving forward.
It was acknowledged that the company had been excited to begin operations in the UK. The email also noted the company’s disappointment in having to reverse their initial decision. All hope is not to be lost, however, as Robinhood stated that they intended to continue to democratize finance for all and hope to one day expand into the UK.
A Summary of Robinhood’s Year in 2020
This year has proven to be somewhat challenging for Robinhood. Back in March, the company’s app was unavailable for days, which drew criticism from customers. Now, the far-reaching effects of the COVID-19 virus has put a halt in its expansion plans.
The company is working to bounce back, however. Just last week, their Series F funding round was completed, with $280 million initially raised. As a result, Robinhood’s valuation is now at $8.6 billion.
Previously, their valuation was $8.3 billion, but this changed following the arrival of their new partners. An additional $320 million was brought in by TSG Consumer Partners and IVP, which brought their total Series F funding to $600 million. With this new influx of capital, the company reportedly intends to expand its new Denver office, as well as hire new talent to prevent any future platform disruptions.
The effects of COVID-19 have brought some benefit to the company, as they have recorded 13 million users on its platform. It is believed that some of these are new users who wish to take advantage of the volatility of US stocks. It has also brought up the topic of how exactly Robinhood can stay profitable.
The company has been ranked as the leading stock trading apps due to its free and seamless nature. Its profit, however, comes from market makers’ rebates alongside volume rebates from trading exchanges, which adds up considering its large user base. There is also their $5-a-month Gold Plan, which offers additional features to users.
Also, uninvested funds on Robinhood are put into high-interest generating bank accounts. This allows the company to maintain its profitability while giving free services. These free services also help to boost Robinhood’s reputation as a valuable trading platform.
Do you think Robinhood will eventually make its expansion into the UK? What does this move mean for their overall profitability? Let us know your thoughts below.