Robinhood Markets, the trading app for young investors, wants its user base to get even younger.
The digital brokerage is kicking off a nationwide marketing campaign on Wednesday designed to turn more students into Robinhood customers. Robinhood gives students who sign up for brokerage accounts using their school email address $15 to trade, and they enter a $20,000 giveaway. Robinhood executives will visit community college campuses and historically black colleges and universities this fall.
Millions of users downloaded the Robinhood app earlier this year to purchase shares in GameStop Corp. and other popular stocks to buy and sell. Many were novice investors. Robinhood reported earlier this year that the average user was 31 years old and that more than half of its clients had never had a brokerage account before. Robinhood already has more than 3.8 million student customers.
Lately, however, trading activity across the industry has begun to slow down. At Robinhood, the daily average number of equity transactions in the second quarter was about the same as a year earlier. For the third quarter, Robinhood forecast that new account opening would slow.
Robinhood’s product chief Aparna Chennapragada said the marketing push is a continuation of Robinhood’s long-term mission to make investing accessible to people who hadn’t participated in the markets in the past. The campaign, she said, is about “meeting the next generation where they are” and communicating that starting young students can enjoy the benefits of compound returns for decades to come.
Courting students is difficult for Robinhood. Critics say the app has turned trading into a game-like experience that encourages inexperienced investors to take risks they don’t understand.
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Earlier this year, Robinhood settled a culpable homicide lawsuit filed by the family of a college student who committed suicide after he believed he had incurred large trading losses on Robinhood. In June, the company agreed to pay nearly $70 million to resolve a regulator’s allegations that it has approved ineligible traders for risky strategies and failed to oversee its technology, which was hit last year. outages due to market volatility. Robinhood has neither admitted nor denied the claims.
Robinhood, Chennapragada said, has invested heavily this year in informational content in formats younger investors can understand, such as the Snacks newsletter. In recent months, Robinhood has also stepped up customer support and removed the controversial digital confetti feature from its platform.
“A majority of young people are still not ready to think about investing,” she said.
Fueled by social media and free stock trading platforms, it is estimated that more than 20 million new retail investors have started trading on brokers across the industry since the beginning of 2020, according to Devin Ryan, director of financial technology research at JMP Securities.
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At Robinhood, Chennapragada said, the view is that there are many more potential customers who can still invest, although trading on message boards on platforms like Reddit has been largely quieter than earlier this year.
Robinhood’s competitors are also chasing new customers. JPMorgan Chase & Co. is renewing its product for online investing. Fidelity Investments Inc. said earlier this year it would offer investment and savings accounts to 13- to 17-year-olds whose parents or guardians also invest with the company.
This article was published by Dow Jones Newswires