Zero-fee stock trading app Robinhood is completing a huge fund raise to fuel its attack on big brokerage firms that charge around $7 to $10 per trade. According to sources, the round is led by Yuri Milner investment vehicle DST Global and values the company at $1.3 billion. Robinhood declined to comment.
Robinhood got its start in 2013 by offering a way for younger, less wealthy users to start investing. It provides an easy-to-use app for free tracking and trading of stocks. Robinhood replaces the traditional brokerages like Scottrade and E*Trade who charge per trade to cover their brick-and-mortar franchise, sales staff, and marketing spend.
Since Robinhood instead employs a leaner engineering-focused team and doesn’t need physical locations, it can pass the savings on to customers and undercut competitors by charging no per trade fee.
Robinhood has since built a platform that allow other developers to offer zero-fee trades in their own apps. Last year, it launched its primary revenue stream, a $10 per month premium Robinhood Gold option. That allows users to skip the three-day waiting period for deposits and make trades instantly, as well as borrow up to double the amount of money in their…