Robinhood made retail trading easy and accessible for new investors. Now that those investors are more sophisticated it is racing to give them the advanced features they want so they don’t abandon the trading platform for a competitor.
Though shares of Robinhood have nearly doubled so far this year to $24, they remain well below the record high of $44 dollars it hit in August 2021. 
To drive its stock back to record levels, Robinhood will have to continue to boost revenue, which it needs to retain customers to do. Third quarter revenue missed analyst expectations of $663.47 million by almost 4%, or $27 million, coming in at $637 million. Earnings per share fell short of analyst expectations by almost 6%, coming in at $0.17.
However, some analysts remain hopeful about the company’s growth and expect record high profits in 2024 and 2025. The company is expected to report $2.59 billion in revenue in the fourth quarter, and earnings per share of $0.72. In the first quarter of 2025, revenue is expected to be $2.73 billion with earnings of $0.82 per share.
“While we were really great at helping new investors get started, a lot of our new investors became active traders. And, the more often someone was trading on Robinhood, the less happy they were with our platform,” Robinhood’s founder and Chief Executive Officer Vlad Tenev said at the Oct. 17 opening ceremony of “HOOD week” , the company’s promotional offer period.
Tenev believes that those active traders would soon be moving to competitors like Fidelity and Etrade because its rivals offer index options trading, futures trading, and more charting. That’s why he’s committed Robinhood to roll out those features as well.
Robinhood is best known for revolutionizing trading by making investing accessible, affordable, and so simple that you could teach yourself. The easy-to-use platform lets the average person get a taste of Wall Street by purchasing fractions of shares. However, post-pandemic those self-taught traders have advanced to another level of investing. They’re trading bigger, more complicated assets and yearning for the charting that visualizes those transactions which Robinhood didn’t offer, until now. This course correction and new product rollouts come as the stock market sees high volume, reminiscent of that seen during the pandemic.
Innovation isn’t new to Robinhood. The company has consistently built out new features since its 2015 launch. It started offering margins and option trading within two years, crypto trading in 2018 and most recently announced futures and index options will be available before the end of the year.
“Robinhood is leaning into these more engaged, more monetizable traders with its ongoing rollout of its desktop trading platform and imminent roll out of index options and futures,” JP Morgan analyst Kenneth B. Worthington said in a note on Oct. 30.
Experienced traders trade more and that’s why they’re more profitable for companies like Robinhood. But they have no patience for glitches and Robinhood is taking its time rolling out the advanced assets.
. Some traders, like 3-year Robinhood user and Los Angeles resident Megan, are using the time between now and general market rollout to increase their knowledge of the derivative contracts.
“I unapologetically use Robinhood,” said Megan, popularly known as MeggyMoon on Reddit and Discord, where she teaches financial literacy to more than 17,000 members.
She uses the platform primarily for short and medium term trading for options and securities, and favors the visualization aspects especially for more complex trading strategies. She plans on learning about futures trading now that it’s available and is interested in Robinhood Legend, the company’s real-time analysis and trading desktop platform.
MeggyMoon said she likes some of the highly competitive options trading features Robinhood has added, but hopes the platform doesn’t shift too far from its original goal.
“We don’t want them to turn into just a regular old traditional broker,” she said.
Robinhood added election betting to its product offering approximately a week before the Nov. 5 presidential election. So far, the political betting market is dominated by PolyMarket.
“Given the timing of Robinhood’s launch and the gradual rollout to clients, we think volumes are likely to be some fraction of those on PolyMarket,” Barclays analyst Benjamin Buddish said in a note on Oct. 28, the date of launch for election betting on the platform.
He added that the volume from the election contracts could have a minimal boost to reporting in the fourth quarter only.
App users can expect one more feature, tax lot management, to be rolled out before the end of the year. Tax lot management is a record of all transactions and their outcome. Robinhood has already begun the process by introducing a per-trade profit and loss management feature in October.
Some experts aren’t convinced that the company will achieve its goal of attracting sophisticated traders or is on the road to long-term success.
“I don’t think they’re going to get sophisticated investors,” analyst David Trainer of New Constructs said. “it’s gamified. I don’t think smart investors think of investing as a game.”
Trainer also called out Robinhood because it doesn’t provide research to its customers and said they have to do more than just grow their product offerings. In fact, he believes the business is “likely doomed” because they target a portion of the market “that’s never going to be very profitable.”
Worthington too is skeptical about Robinhood’s future.
“While 10 million of these contracts were traded on its launch day, we view these contracts less positively—more like a betting market,” Worhtingotn said. He added that getting sophisticated traders who’ve always used other firms to switch may be an uphill battle for Robinhood.
“We do not see growth as sustainable,” Worthington continued in his note. While the company has leveraged innovations, and it is possible the company will be profitable this year “the sustainability of such earnings in a lower rate environment remains uncertain,” he said.
Improving customer service and customizing advice for transactions based on what assets, shares or option calls, that a user is holding like competitors Fidelity, TD Ameritrade and Scwab offer are two more strategies the company needs to be sustainable from a user’s perspective, MeggyMoon said.
“They have an opportunity to get back to their initial core mission and goal of helping ordinary investors to make money and not feel like they ‘don’t belong in the market’ or that the ‘market’s not for them’, or ‘they should just hand their money over to market makers and fund managers’,” she said. “Because that’s where we’ve seen a lot of the corruption.”