INSUBCONTINENT EXCLUSIVE:
The biggest players in online stock trading all just copied Robinhood by removing their fees for stock and ETF trading
Charles Schwab announced yesterday it would drop its $4.95 fee, leading to plummeting share prices for it as well as competitors
By the end of yesterday, Ameritrade announced it too would axe its $6.95 fees, and then E*Trade followed suit this morning killing off its
However, none of their share price recovered.From yesterday before Schwab’s announcement through now, Schwab fell 12%, from $41.84 to
$36.54; E*Trade fell 19%, from $43.69 to $35.20; and Ameritrade fell 28%, from $46.70 to $33.54
Clearly investors aren’t thrilled that these financial giants are bowing to pressure from a measly startup.Yet the move could definitely
hurt growth for the $7.6 billion-valued fintech upstart Robinhood
It has relied on the free stock trades to pull in users that it then monetizes with its Robinhood Gold subscription to premium services,
including the ability to trade on margin by temporarily borrowing money from the company.Schwab drops its fees“The changes taking place
across the brokerage industry reflect a focus on the customer that‘s been inherent to Robinhood since the beginning,” said a
spokesperson for the startup
“We remain focused on offering intuitively designed products that reduce barriers to our financial system, including account minimums and
commission fees.”Robinhood was hoping a high 3% interest rate checking account feature announced in December might help differentiate it
from online stock brokerages
But after it prematurely launched the checking product without proper insurance, massive backlash ensued and the company announced it would
shelve and rethink the idea
But that hiccup didn’t stop it from raising another $323 million this July to bring its total raised to $862 million
Its young user base and cryptocurrency exchange could give it potential that aged trading platforms lack.
