Robinhood, the stock trading app, is close to closing a round of funding that could give it a valuation of more than $1 billion.
According to a report in Fortune, in November Robinhood had been in talks to raise funding of around $100 million at a valuation of $600 million to $700 million, according to sources. With nothing coming of it, Fortune assumed the deal talks came unhinged. The pending fundraising and higher valuation could be because Uber drivers were using the platform to buy Snap stock. According to the report, Robinhood has 1 million users and said 43 percent of investors who traded on Snap’s first day of trading as a public company bought Snap stock. Of the Snap investors, it said the median age is 26, the same age as Snap CEO Evan Spiegel. Late last month, Bloomberg News divulged that a spate of positive reports have gone out on Snap, the recent IPO of the parent company of Snapchat. The newswire noted that some of the biggest names on Wall Street, such as Goldman Sachs and Morgan Stanley, among others, have been sanguine on the tech firm.
In 2014 Robinhood Financial launched its zero-fee stock-trading app. At the time, the iOS app, which has been in beta for six months and has 500,000 potential users on its waiting list, was a minimalist app that let users set up an online brokerage account, transfer funds from accounts at major banks (including Chase, Citi and Bank of America) and check the prices of their stocks. But the big draw for Robinhood is the fact that basic trades are free. The company expects to pay its bills through interest on funds held in cash accounts, margin lending and eventually fees for higher-value brokerage services. Today Robinhood offers its Robinhood Gold service that gives users access to after-hours trading for as little as $10 per month. This is the only product Robinhood charges for and is optional. Trading is still commission-free.