((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto)) by Niket Nishant and Manya Saini
Robinhood Markets HOOD.O’s suite of new products, including its credit card and futures trading platform, will be crucial to driving growth as market swings and regulatory risks cloud the near-term outlook of its traditional business, analysts said.
The expanded offerings show that the 11-year-old trading app, best known for its appeal among retail traders, is beginning to mature into a full-fledged financial services provider.
“Traders are looking for more sophisticated and diverse offerings after the meme-stock era and Robinhood needs to expand its services to keep up,” said Dan Raju, chief executive of brokerage platform Tradier.
Here are some charts explaining the situation for the Menlo Park, California-based company:
CREDIT CARD
More than a million customers have joined the waiting list for a credit card Robinhood launched for its Gold subscribers in March.
The card charges no annual fee or foreign transaction fees and offers 3% cash back, in the form of rewards points, on spending. Analysts believe it is key to boosting subscriptions to the next level.
“Robinhood and other neobanks in the market are proving they can be formidable competitors in the banking industry,” said Lauren Ashcraft, financial services analyst at Emarketer.
RETIREMENT ACCOUNT
Robinhood offers a retirement account to its customers. Eligible contributions to the account may be matched with a percentage, subject to a five-year holding period.
Pension assets on deposit stood at $4.2 billion at the end of March, compared to $0.3 billion at the end of last year.
GOLD SUBSCRIPTIONS
During the first quarter, the number of Gold subscribers jumped 42% to a record 1.7 million, Robinhood said.
The Gold membership gives customers access to several premium features – like a higher match on their retirement account contributions, higher interest rates on their uninvested cash, and cheaper margin loans.
“Although the company has been successful in attracting new customers to the platform, the question of long-term profitability remains for investors,” Barclays analysts said.
FUTURES CONTRACTS, INDEX OPTIONS transactions
Robinhood said it is focused on being the platform of choice for users who trade more actively and use more sophisticated products.
It is expected to launch index futures and options trading later this year.
“We intend to make (the economy) very, very competitive, but also profitable for the company on a segment basis,” CEO Vlad Tenev said.
TRANSACTION REVENUE
Strong crypto trading volumes due to optimism stemming from the approval of the first bitcoin exchange-traded funds in January helped the company post better-than-expected first-quarter profit on Wednesday.
“JPMorgan analysts said that despite a strong quarter, we emphasize that this is a great environment for Robinhood and its customers, and is likely more unusual than normal.
Robinhood said momentum continued into the second quarter, although some urged caution.
“Given the natural fluctuation in its trading volume and cryptocurrencies, as well as the regulatory uncertainty following the Wells notice, it will be difficult to maintain this level of growth,” Mr. Ashcraft said. ‘Emarketer.
