Venture capital investors are betting big on Robinhood
People are stuck at home, especially younger investors, and trading in a market that’s experienced the fastest bear market recovery in Wall Street history.
The trading start-up announced a $200 million, Series G funding round on Monday — its third major investment in just five months.
The new cash injection boosts Robinhood’s valuation to $11.2 billion, an increase of nearly $3 billion.
The latest investment comes from a new backer, New York-based D1 Partners, just a month after Robinhood closed another late-stage round.
In July, Robinhood said it was adding $320 million investment to a prior series of funding, which had been announced in April.
That had boosted its valuation to $8.6 billion. D1 joins high-profile Robinhood investors such as Sequoia, Kleiner Perkins and Google’s venture capital arm, GV.
The flurry of venture capital cash comes in a historic year for the U.S. stock market and a high-growth period for brokerage firms.
Robinhood is now worth nearly as much as E-Trade
Morgan Stanley purchased E-Trade back in February for a little over $13B
Morgan Stanley to buy E-Trade for $13 billion in latest deal for online brokerage industry
E-trade, with 5.2 million client accounts and over $360 billion of retail client assets,
Meanwhile, According to JMP Securities, the average account size for a typical Robinhood account ranges from $1,000 to $5,000. The app has around 13 million users.
CNBC: Young investors pile into stocks, seeing ‘generational-buying moment’ instead of risk
The major online brokers — Charles Schwab, TD Ameritrade, Etrade and Robinhood — saw new accounts grow as much as 170% in the first quarter, when stocks experienced the fastest bear market and the worst first quarter in history.
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‘Monumental volumes’
The major online brokers saw a major jump in new users during the coronavirus sell-off, bolstered by zero commissions and fractional trades.
Charles Schwab CEO Walt Bettinger said in an earnings release the broker saw “monumental volumes” of trading from the 609,000 new broker accounts added in the first quarter, with over 280,000 in March alone.
The quarter included 27 of the 30 highest volume days in Schwab’s history.
Young Investors are buying. Experienced Veterans are cautious:
Sam Zell is Selling:
Sam Zell mentioned this week that he was quite cautious about the future.
Billionaire Marc Lasry is cautious:
Billionaire investor Marc Lasry says the market isn’t pricing in a recession that will last ‘for a while’
