Robinhood Stock Is a Publicly Traded Company You Can Own Shares In

Robinhood Markets, Inc. is a brokerage company that went public in July 2023 under the ticker symbol HOOD. When you own Robinhood stock, you own a small piece of the company itself — not the stocks or investments that other people trade through the platform. The company makes money by charging fees on certain trades, offering premium subscription services, and lending cash to customers who want to buy on margin.

If you buy Robinhood stock through any brokerage account (including Robinhood's own platform), you become a shareholder. That means you have a claim on a portion of the company's profits and losses. The stock price moves based on how investors think the company will perform — whether more people will use the app, whether regulators will impose new rules, and whether the company will remain profitable.

Robinhood stock is different from holding individual company stocks like Apple or Tesla through Robinhood's app. When you trade those stocks on Robinhood, you own the underlying companies. When you own Robinhood stock, you own a piece of the brokerage firm itself.

Key Takeaways

  • Robinhood stock (HOOD) represents ownership in Robinhood Markets, the brokerage company, not in the individual stocks you might trade through their app.
  • The stock price fluctuates based on investor sentiment about the company's profitability, user growth, and regulatory environment.
  • You can buy Robinhood stock through any brokerage account, including Robinhood itself, just like you would buy any other publicly traded company's shares.
  • Robinhood the company generates revenue from trading fees, premium subscriptions, and margin lending, which affects whether the stock performs well or poorly.

How Robinhood the Company Makes Money

Robinhood's revenue model determines whether investors think the stock is worth buying. The company charges transaction fees on options trades and certain other transactions. It also offers Robinhood Gold, a paid subscription tier that gives users margin buying power and other features — subscribers pay a monthly fee for this service.

A significant portion of Robinhood's income comes from payment for order flow (PFOF). This means market makers and other financial firms pay Robinhood for the right to execute customer trades. When you place a trade on Robinhood, the company routes that order to a firm that pays for it, and Robinhood keeps a portion of that payment. This practice is legal but controversial — some argue it creates a conflict of interest because Robinhood profits when your trades happen, regardless of whether they benefit you.

The company also earns interest on cash balances held in customer accounts and on margin loans. If Robinhood's user base grows and trading volume increases, these revenue streams expand, which can drive the stock price up. If trading volume drops or regulators restrict how the company operates, revenue falls and the stock price typically declines.

What Affects Robinhood Stock Price

Robinhood stock price moves based on several factors specific to the brokerage business. User growth matters — when more people download the app and open accounts, investors expect higher future revenue. Trading volume also drives the stock: during periods of high market volatility, retail traders tend to trade more frequently, which increases Robinhood's transaction fees and PFOF income.

Regulatory changes have a direct impact. The Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) oversee how brokerages operate. New rules about payment for order flow, margin requirements, or options trading could reduce Robinhood's revenue or increase its costs. When regulators announce investigations or propose restrictions, the stock often falls.

Competition from other brokerages also matters. Fidelity, Charles Schwab, E-Trade, and others offer similar commission-free trading. If a competitor offers better features or lower fees, Robinhood may lose users, which would hurt the stock price. Broader market conditions matter too — during market downturns, retail trading volume sometimes drops, which reduces Robinhood's revenue.

The Difference Between Owning Robinhood Stock and Using Robinhood to Trade

Many people confuse these two things. Using Robinhood's app to buy Apple stock means you own Apple — you benefit if Apple's business improves and the stock price rises. Owning Robinhood stock means you own a piece of the company that provides the platform for trading. You benefit if more people use Robinhood and the company becomes more profitable.

You can do both at the same time: you can use Robinhood's app to buy Apple stock and also own Robinhood stock in the same account. They are separate investments with separate risks. If Apple performs well but Robinhood faces regulatory trouble, your Apple shares might gain value while your Robinhood shares lose value.

Risks Specific to Robinhood Stock

Robinhood stock carries risks that other stocks do not. The company operates in a heavily regulated industry, and new rules can quickly change its business model or profitability. The SEC has already fined Robinhood multiple times for compliance violations, and future enforcement actions could be costly or restrict how the company operates.

Robinhood also depends on retail trading volume. During calm market periods when people trade less frequently, the company's revenue drops. The company is not yet consistently profitable — it has had quarters with losses — so investors cannot assume steady earnings growth.

Competition is intense. Established brokerages like Fidelity and Charles Schwab have deeper resources and larger customer bases. Newer competitors could also emerge. If Robinhood loses market share, the stock price will likely fall.

How to Buy Robinhood Stock

You can purchase Robinhood stock (ticker: HOOD) through any brokerage account — including a Robinhood account itself. Open an account with any broker, search for the ticker HOOD, and place an order to buy shares at the current market price or set a limit order at a price you choose.

You can buy fractional shares through most brokerages, which means you do not need to have enough money for a full share. If Robinhood stock trades at $20 per share and you have $10, you can own half a share. The stock trades on the Nasdaq exchange during regular market hours (9:30 a.m. to 4 p.m. Eastern Time, Monday through Friday).

Before buying any stock, consider your overall investment strategy. Owning individual company stocks is riskier than owning a diversified fund or index fund. If you are new to investing, a financial advisor or educational resource can help you understand the risks and whether individual stocks fit your situation.

Frequently Asked Questions

Does owning Robinhood stock give me any special features or discounts on the app?

No. Owning Robinhood stock does not change your access to the platform or give you discounts on Robinhood Gold or other services. You are simply a shareholder in the company, not a preferred customer. Your trading experience remains the same whether you own one share or no shares.

Can Robinhood stock pay dividends?

Robinhood has not paid dividends to shareholders. The company reinvests profits (when it has them) into the business rather than distributing cash to shareholders. This could change in the future if the company becomes more profitable and decides to return cash to investors, but there is no current dividend.

What happens to my Robinhood account if the company goes bankrupt?

Your brokerage account is protected by the Securities Investor Protection Corporation (SIPC), which covers up to $500,000 per account if a brokerage fails. This protection applies to the stocks and cash in your account, not to the value of Robinhood stock itself. If you own Robinhood shares and the company fails, those shares would likely become worthless, but your other holdings would be protected.

Is Robinhood stock a good investment?

That depends on your financial situation, risk tolerance, and investment goals. Robinhood stock is volatile and the company faces regulatory and competitive pressures. Some investors believe the company will grow and become more profitable; others think the risks outweigh the potential gains. Research the company's latest financial reports and consider speaking with a financial advisor before deciding whether to buy.