This is Why People Are Investing in Robinhood

In late July 2021, people were able to buy stock in Robinhood. Since Robinhood is one of the quintessential robo-advisor platforms, with many people using the app to manage their own trades, interest in the stock was fairly high. However, as with many IPOs, there was an initial slump, and things have been a bit rocky since. Still, many people continue to have faith in their Robinhood investment. If you are wondering why, here’s what you need to know.

The Appeal of Robinhood

One thing that Robinhood has long had going for it is familiarity. The investment app is practically a household name, particularly among younger generations who were looking for ways to get involved in the market that didn’t require a traditional brokerage.

Name recognition can play a role in a company’s – and its stock’s – success. People are often more comfortable investing in something that they believe they understand and that works in Robinhood’s favor.

Additionally, many people who use Robinhood to invest may have viewed investing in the platform as a logical choice. After all, it’s an app they may use regularly, so they believe in its capabilities and offerings. Plus, they can use the Robinhood app to buy Robinhood stock, making it very simple to get from interested to invested.

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Long-Term Potential of Robinhood Investment

A Robinhood investment does have the potential for long-term growth. The company’s financial projections suggest that the company has reliable revenue streams available, even while maintaining commission-free trades for users.

While one of Robinhood’s revenue streams – payment for order flow (PFOF) – has come under scrutiny recently, the company asserts that PFOF only makes up a small portion of its revenue. Additionally, Robinhood says that it could quickly make up for any losses should the practice become banned. It’s also essential to understand that PFOF is a widely used approach, so restricting the practice doesn’t just impact Robinhood but the brokerage market as a whole.

It’s important to note that Robinhood has made its way into some high-profile ETFs, including the Ark Innovation ETF. That indicates that some experts believe that Robinhood is poised for growth.

Should You Invest in Robinhood?

While it’s true that it’s impossible to predict whether any stock will ultimately rise or fall, it seems that many people have faith in Robinhood’s potential. Many younger investors still favor the platform for their trades, and the odds of that changing any time soon are relatively low. Additionally, the company appears to have solid revenue streams and a plan for growth, something that could make it a wise investment for the long term.

Still, whether Robinhood is right for you depends on your situation. Consider your goals, risk tolerance, and portfolio makeup. That way, you can head in a direction that feels best to you.

If you haven’t made a Robinhood investment yet, there’s still time. Download the Robinhood app today, and you could be on your way to investing faster than you’d expect.

Do you think that investing in Robinhood is a smart move? Did you decide to invest in Robinhood only to question your decision? Did you choose to wait, only to wish you’d invested in Robinhood sooner? Share your thoughts in the comments below.

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Tamila McDonald

Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.