Yesterday, in an appearance on CNBC’s “The Exchange,” Robinhood (NASDAQ: HOOD) Co-Founder and CEO Vlad Tenev discussed the platform’s strategies for retaining customers, the evolving demographic of its user base, and more, with technology reporter Kate Rooney. Tenev highlighted the significant role of promotions and incentives in attracting users to Robinhood, particularly emphasizing the benefits for Gold customers, including a 3% match on contributions to retirement accounts and bonuses for 401(k) rollovers and incoming transfers. He attributed the feasibility of these promotions to Robinhood’s efficiency as a technology company, which enables lower service costs compared to traditional financial institutions.

Tenev also addressed the changing demographics of Robinhood’s user base. Historically known for attracting younger, first-time investors, Robinhood has shifted its focus towards serving more active traders, expanding its services to include retirement savings and aiming to become the primary account for users rather than a secondary option for discretionary investing. This strategic pivot has begun to show positive results, with a 25% year-over-year growth in Gold subscribers and increased market share in equities and options trading.

The CEO revealed that the platform is now attracting users with larger portfolios, indicating a departure from its original demographic. These users are transferring significant assets into Robinhood, with the average size of transfers reaching around $100,000. This shift underscores Robinhood’s appeal not just to novice investors but also to those with substantial investment experience and assets.

In terms of trading activity, Tenev noted a continued strength in equities market share, which rose by 14% year over year, alongside considerable growth in options trading. The crypto market share has also seen substantial increases, reflecting the platform’s broadening appeal across different asset classes.

During Robinhood’s Q4 2023 earnings call on February 13, Tenev outlined the company’s strategic focus and celebrated its achievements over the past year. Tenev emphasized Robinhood’s commitment to three core objectives: dominating the active trader market, enhancing customer engagement to increase wallet share, and pursuing international expansion. He proudly acknowledged the team’s efforts, which led to a 14% increase in equities trading market share and a 19% rise in options trading market share year over year. Additionally, Gold subscribers grew by 25% to 1.4 million, and assets under custody surpassed $100 billion, driven by a notable 27% organic growth in net deposits.

Robinhood has made significant strides internationally, launching brokerage services in the U.K. and cryptocurrency trading in the European Union. Tenev highlighted the impressive inflow of $1.3 billion in net positive brokerage account transfers to Robinhood in Q4, a figure already surpassed in the first half of Q1 2024. This achievement underscores Robinhood’s success in attracting net asset inflows from major competitors, with an average transfer size exceeding $100,000.

Tenev expressed enthusiasm for the momentum Robinhood is building and its prospects for 2024. He outlined the company’s roadmap, which includes enhancing the user experience, introducing innovative products like 24-hour markets, adding new asset classes such as futures, and expanding into new account types. Tenev also noted Robinhood’s unique position in adopting technologies like cryptocurrency, where it continues to invest and extend its lead.

On increasing wallet share, Tenev discussed the success in driving net account transfers from other brokers and sees significant potential for growth, especially in passive offerings like retirement accounts. Internationally, Robinhood’s launch in the U.K. for brokerage and the EU for crypto significantly expands its market reach, setting it apart from many traditional brokers without a notable international presence.

Tenev concluded with optimism about Robinhood’s strategy execution, suggesting that the company is poised to win by even larger margins in the future, driven by its commitment to innovation, customer engagement, and global expansion.

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