Investment Banking and Brokerage

Free investing app Robinhood not looking to charge

How Robinhood makes money

The microinvestor-focused app Robinhood took the brokerage world by storm after launching to offer commission free trades late last year.

Eight months later, the start-up now boasts hundreds of thousands of customers and over $1 billion worth of trades transacted through its platform. But with no revenue stream coming from commissions or fees, some have wondered if Robinhood might potentially introduce fees later.

"That's not the plan. You've got to look at how Robinhood has been doing since launching to the public," co-founder Vladimir Tenev told CNBC's "Closing Bell" in an interview. "We're growing extremely quickly, and the one thing that a lot of people don't realize is all that growth has been on one platform."

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Source: Robinhood

Robinhood, which had only been available on iOS, became available for Android users this past Thursday. Tenev described the demand he saw for his trading platform as "tremendous and overwhelming."

"We had more than 50,000 sign up on the first day we were available on Android," he said. A large part of that demand has been made up by younger investors, a quarter of which are first-time investors. The platform seems to be connecting with users, whether it's the commission-free model or the fact the feel of the app earned the first-ever Apple design award for a financial app.

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As for how the app might be able to grow revenue, Tenev reiterated that more users can still result in more revenue despite the commission-free model.

"As long as people continue to enjoy the product, more and more people will use it, and the existing revenue streams are more than enough to create a long-term sustainable business," he said.

The history of other brokerages in the business would say otherwise. For traditional brokerages like TD Ameritrade or Charles Schwab commissions and fees amount to nearly half of all revenue, while bid/ask spreads can make up about a third.

Correction: An earlier version of this article misstated how many Android users signed up for Robinhood on the first day it was made available.