Last week, Menlo, CA headquartered fintech investment app Robinhood launched fractional share trading that allows investors to buy as little as one-millionth of a share or one dollar of any stock for no fee.
It’s not the only fractional share service out there but it’s now the service offering the smallest share fraction for traders among competitors that include Square, SoFi, Stash, Betterment and Charles Schwab.
That means those shares of Amazon trading in the $1765 range today, Google ($1359) or Apple ($280) are now within reach of even the smallest investor. And, at no fee.
“One of our core values is participation is power,” said Robinhood co-CEO Vlad Tenev. “Everything we do is rooted in this. We believe that fractional shares have the potential to open up investing for even more people.”
New features for 10 million+ users
With more than 10 million current users and more than $910 million in funding, Robinhood is counting on adding many more investors to try to take from the richer lords and ladies and give to those investors less fortunate.
The fractional share trading lets investors make real-time fractional share purchases or trades in dollar amounts as low as one dollar or as low as 0.000001 shares rounded to the penny during trading hours. Stocks worth over $1 per share with a market cap over $25 million are eligible, making more than 4000 different stocks and ETFs available for commission-free, real-time fractional trading.
It’s also adding new features such as Cash Management which provides a 1.8% APY interest rate on cash in a user’s Robinhood account plus a Mastercard debit card for purchases or withdrawals from a network of ATMs.
Two new features will launch in the new year including an automatic Dividend Reinvestment Program (DRIP) and the ability to schedule daily, weekly, or monthly investments into stocks as well as a new cryptocurrency trading option.
Aiming for new, younger investors
Robinhood says half of its 10 million customers are first-time investors and their median age is 30. This is a mobile-savvy, mobile-enabled, and mobile-proficient consumer and the competition for this lucrative new investor market is heating up.
Witness the launch of Atom Financial’s free investment app with access to financial modeling, portfolio tracking, news analysis, benchmarking and discussion tools. Atom already has more than 100,000 users and $400 million in assets since soft-launching in June 2019. Compared to the $24,000 annual cost of Bloomberg Terminal, free looks pretty good.
In true Robin Hood fashion, the Robinhood app suffered an embarrassing software bug last month which allowed users to trade using excess borrowed funds before it was finally corrected.
So, all is not always smooth in the Sherwood Forest of fintech stock market investments. But, what’s not to like about this new Robinhood fractional trading offer if you’re a peasant toiling in the cubicle farm watching the rich get richer?
More information about fractional trading is available at the Robinhood website.
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