The pioneer of commission-free investing, Robinhood, has announced that its latest funding round has reached $200 million. The generous investment has increased Robinhood’s valuation from $8.6 billion to $11.2 billion. It also marked the third cash infusion into the brokerage and investment firm in four months.
The broker had $4.3 million average revenue trades each day in June and outperformed its competitors. Robinhood’s daily revenue trades more than doubled during the second quarter compared to the first quarter of 2020. The firm also added three million new customer accounts at the beginning of the year.
Its trading volume and revenue have both surged, doubling revenue from customer trading. Most of it came from options trading.
There have also been challenges alongside Robinhood’s success. The platform had multiple outages in March when many clients were unable to trade on a historic day. The Menlo Park, California-based company, said both volatility and record trading volumes contributed to the outage.
The platform has reported record trading during the coronavirus pandemic. Robinhood and its peers have had a historic year for growth. Its venture cash investors are often younger and are putting a lot of confidence in the start-up and the stock market, in general.
D1 Capital Partners, a New York-based investment firm, backed the recent investment. Just a month ago, Robinhood captured another round for $320 million. Other notable Robinhood investors are Sequoia, Google’s GV, and Kleiner Perkins.
The U.S. stock market has had a historic year, and it’s been particularly good for Robinhood and some of its publicly-traded peers, including Charles Schwab, TD Ameritrade, and E-Trade. All have seen record growth this year. The S&P 500 entered a bear market in March, but this week, it’s rivaling its February record high.
Robinhood has options trading as well as cryptocurrency and equity trades. The start-up also offers cash management accounts to its customers. The platform has free trading for most of its transactions and makes revenue off its paid subscription service and order flows. The company says the average age of its clients is 31 years old.
Robinhood plans to invest its latest funds in customer experience as well as its core product.