[7Figures2Commas]

I think Robinhood is a good example of how you can develop a seemingly great user experience based on a bad business case.

When you consider that the average young, inexperienced investor is going to come out on the short of the stick by "trading" frequently, Robinhood's zero commission value proposition is quite weak. In my opinion, a young investor would be much better off signing up for an account at say, Fidelity, where they get access to a good deal of research and can buy and sell 70 iShares ETFs commission-free.

Furthermore, Robinhood's stated target market ("millennials") is an odd one for a company seeking to monetize via margin. I'd venture a guess that most of the investors in this market don't even know what margin is, and the vast majority who do have no business using margin if they can even meet the minimum equity requirement to set up a margin account. If Robinhood is banking on establishing a relationship with young investors, this is naive. Whales will always take their money elsewhere and I doubt that Robinhood will ever be able to compete with folks like Interactive Brokers, OptionsHouse, etc. for the big-balance margin accounts.

The fact that Robinhood is already expanding to Australia, which has a population of less than 25 million and where annual trading volume is significantly lower than the US, is telling.

[vasilipupkin]

I think you hatin on the company is unwarranted. Millions of people already trade stock. Given that they do, they are better off paying less for it than more. Investors who trade infrequently and trade something like SPY also benefit because they get lower fees and, hopefully, they don't need brick and mortar support. "Whales will always take their money elsewhere" - why ? Why do "whales" want to pay more for their trades. I am not saying Robinhood is the second coming of Jesus, but I don't see any good reason for hatin' on the company, the way you do

[7Figures2Commas]

First, I am not "hatin" on Robinhood. I don't believe the company's value proposition is very compelling, particularly for its target market, and I explained in detail why.

Second, you are making some flawed assumptions about what's best for investors. In terms of transaction costs, to save a meaningful amount, you need to be making a meaningful number of trades. As I noted, other brokerages, like Fidelity, offer access to commission-free products that are appropriate for average investors, so in some cases Robinhood offers no savings.

Beyond transaction costs, the average investor does not benefit from engaging in frequent trading and stock picking. Saying you saved $200/year on transaction costs doesn't mean much when your portfolio performance lags the market. The average investor will do better with reasonable diversification and a sensible buy-and-hold strategy than he or she will trading in and out of individual issues because there's no commission.

Regarding whales, at Interactive Brokers, for instance, you can pay as little as 0.5% over the benchmark rate on margin balances and a fixed rate commission of $0.005 per share per trade. Do the math. Robinhood will never realistically be able to compete on cost for that segment of the market.

As I wrote, I think Robinhood's entry into a market that is substantially smaller than the US at this early juncture is a telling indication of its prospects in the US.

[vasilipupkin]

I don't think the entry into Australia is a negative, the way you describe it. Australian fees are much higher than in the US, so it's a great value proposition there. So why not offer the service there as well ?

I agree that people shouldn't trade a lot. This is besides the point. People shouldn't eat a lot of burgers, either. Given that people do trade a lot, though, it adds a lot of value to reduce the cost of that trading. Some people trade a lot for fun, knowing that they shouldn't, if they wanted to maximize return.

As far as Fidelity or Vanguard or others offering commission-free products, how is it bad to have MORE of such products out there ? It's just competition. The devil of the value add is in the exact terms and details.

I don't see your negativity as warranted

[voltagex_]

I'm glad I read these comments but I'm an Australian who is starting to look into both Australian and US trading (TSLA, woo!).

The options for me seem to be really limited, and forget about having a single overview of Australian and US shares - you'll need two accounts with separate brokers for that.

It also looks like companies such as OptionsHouse have stopped allowing signups from Australia

CommSec tried to push a margin loan on to me, all I want to do is aggregate my share portfolio and sell off some poor-performers - it can't be this hard, can it?