Robinhood, the New York-based trading app known for fueling the contentious “meme stocks” speculation craze in the US, is setting its sights on the UK investor market.
The no-commission company, which considerably amplified the trend of buying and selling meme stocks during the pandemic, is now recruiting for crucial roles in the UK. With its headquarters in Silicon Valley, Robinhood has recently posted on LinkedIn job openings for a regulatory specialist and an operations leader and is reportedly looking for a UK CEO.
According to one job post, the company is “excited to be branching out internationally this year, as Robinhood is recruiting top-tier talent in the UK.” As per regulatory documents, the company is contemplating a UK launch by year’s end.
This comes amidst ongoing discussions among politicians and business figures on how to reignite public interest in the stock market, in light of decreasing share ownership and worries over an increasing detachment between the public and financial institutions.
Robinhood’s entrance to the UK market could pose significant competition to local contenders like Freetrade and Lightyear, as well as established retail stock brokerage firms, such as Hargreaves Lansdown.
In the previous month, trading platform CMC Markets indicated a potential slump in demand due to the stock market downturn and waning interest from meme stock speculators.
During the pandemic, homebound individuals, often using stimulus funds from the US government, took advantage of commission-free stock trading apps to invest in meme stocks. Robinhood users notably drove the struggling retailer GameStop’s share price up by 1,700% in January 2021.
Robinhood, established in 2013, had previously almost launched in the UK, having obtained a license from the Financial Conduct Authority and assembled a UK waitlist.
In 2020, amidst escalating scrutiny in the US concerning allegations of customer deception, Robinhood shelved its UK expansion plans. The company came under fire from US legislators following the suicide of a 20-year-old user who erroneously thought he had incurred massive losses on the app.
The family of Alex Kearns, a university student from the US, accused Robinhood of employing “predatory tactics and strategies to entice inexperienced and unseasoned investors, including Alex, to take significant risks.”
Subsequently, Robinhood settled with the Kearns family, and the accusations were dismissed. Vlad Tenev, Robinhood’s CEO, offered an apology, expressing that the incident was “deeply distressing.”
Robinhood, a financial tech firm, has also been accused of gamifying stock market investing. At one point, the app even featured a confetti explosion when users purchased stocks, an element which was later removed. The City regulator has cautioned in the past that trading apps with gamified features could instigate “potential ‘problem-gambling’ behaviours.”
In 2020, Massachusetts authorities alleged that Robinhood had “targeted young people with minimal or no investment experience.” The state’s effort to revoke Robinhood’s license was dismissed by a court, but the decision is currently under appeal.
Robinhood was hit with a $70 million penalty by the US Financial Industry Regulatory Authority in 2021 for technical disruptions during the market crash in March 2020.
In the US, Robinhood permits customers to leverage money to purchase additional shares. Customers also have the option to trade cryptocurrencies such as Bitcoin. However, it remains uncertain if UK users would immediately have access to cryptocurrency, as Robinhood would need to acquire a crypto registration with the FCA.
Robinhood was estimated to be worth over $30 billion when it launched publicly in the US in 2021, but its valuation has since dropped to $11 billion. The company reported a loss of over $500 million in the first quarter of 2023.
A spokesperson for Robinhood verified plans for international expansion but declined to provide further comments.
