After a soft-IPO debut on July 29, 2021, shares of Robinhood Markets Inc (NASDAQ: HOOD) closed 24.20% higher at the end of the trading session on August 3, 2021. Headquartered out of Menlo Park, California, the trading platform has been viewed as a creative and destructive tool in democratizing finance. In early 2021, the trading platform caught market vigilantes’ attention after it served as the conduit for unusual trading activity in shares of Gamestop Corp (NYSE: GME). Vigilantes such as Senator Elizabeth Warren (D- MA), Member of the Senate Banking, Housing, and Urban Affairs Committee, and the Senate Finance Committee have aggressively questioned Robinhood’s business practices with a written exchange occurring between February 2, 2021, and February 12, 2021. The conversation is long but alludes to an overarching theme that Robinhood could expect continued scrutiny for years to come for the nature of the beast that it is.
Robinhood Markets Inc shared its S-1 Registration Statement on July 01, 2021. As of March 31, 2021, the company recorded 18.0 million Net Cumulative Funded Accounts, 17.7 million Monthly Active Users, and $80.93 billion in Assets Under Custody. Compared to March 31, 2020, Net Cumulative Funded Accounts were up 150%, Monthly Active Users up 105.81%, and Assets Under Custody (AUC) up 321.08%. Out of the $80.93 trillion in Assets Under Custody, 80.41% or $65.08 trillion were Equities, and 14.33% or $11.60 trillion were Cryptocurrencies. Compared to March 31, 2020, Assets Under Custody for Equities rose 380.56%, while Assets Under Custody for Cryptocurries shot up 2312.61%. Total Net Revenues and Total Operating Expenses as of March 31, 2021, were $522.17 million and $463.79 million compared to $127.55 million and $180 million for the same period last year.
Other trading platforms that are publicly traded include Charles Schwab Corp (NYSE: SCHW) and Interactive Brokers Group Inc (NASDAQ: IBKR). As of August 03, 2021, Charles Schwab and Interactive Brokers had a ten-year annualized return of 16.86% and 15.97%, respectively. Charles Schwab is a Standard and Poors 500 constituent, and the following chart highlights the ten-year price performance of both Charles Schwab and Interactive Brokers against the SPDR® S&P 500 ETF is as follows:
Juxtaposing some of Robinhood’s metrics against Charles Schwab and Interactive Brokers metrics sounded appropriate as the nascent stock, i.e., Robinhood Markets Inc, needed appropriate barometers to be compared against. For example, in their Second Quarter Fiscal Year 2021 Results, Charles Schwab recorded 32.27 million Active Brokerage Accounts with Total Client Assets of $7.58 trillion, a rise from 14.11 million accounts and $4.11 trillion in Q2 2020.
On the other hand, Interactive Brokers reported 1.41 million accounts with $363.5 billion in Customer Equity in their Second Quarter Fiscal Year 2021 Results, a rise from 876,000 accounts and $203.2 billion in Q2 20. Additionally, Interactive Brokers had a Commission Per Order of $2.38 compared to the $1.89 in Revenue Per Trade from Charles Schwab. Unfortunately, Robinhood Markets Inc does not offer a Revenue Per Trade metric but presents an Average Revenues Per User Metric, which as of March 31, 2021, was $137.0 compared to $82.9 for the same period last year. The following visual compare metrics from Robinhood Markets Inc, Charles Schwab, and Interactive Brokers.
Judging from what Robinhood Markets Inc has achieved in a short time frame, it is worth noting how much of a social and societal shift its platform has induced. Consider Facebook Inc (NASDAQ: FB). Even though the company faces high levels of regulatory scrutiny, which has marginally affect the stock price performance, positive surprises on operating metrics have turned it into a trillion-dollar company. One thing is for sure, with 18 million accounts, $80 billion in assets under custody, an attractive product, and a community following, Robinhood Markets Inc is here to stay for a while.