Robinhood Is Going on a College Tour to Recruit New Customers
The app criticized for gamifying trading is kicking off a nationwide push to court students, including a shot at a $20,000 prize
Robinhood Markets Inc., the go-to trading app for young investors, wants its user base to get even younger.
The digital brokerage is kicking off a nationwide marketing campaign Wednesday that is designed to turn more college students into Robinhood customers.
Robinhood will give students who sign up for brokerage accounts using their school email address $15 to trade, and enter them into a $20,000 giveaway.
Robinhood executives will tour campuses of community colleges and historically black colleges and universities this fall.
Millions of users downloaded the Robinhood app earlier this year to buy and sell shares in GameStop Corp. and other hot stocks. Many were novice investors.
Robinhood reported earlier this year that its median user was 31 years old and that more than half of its customers hadn't previously had a brokerage account. It already has more than 3.8 million student customers.
Lately, though, trading activity has started to slow across the industry.
At Robinhood, the daily average number of stock trades was roughly flat in the second quarter compared with a year earlier. For the third quarter, Robinhood forecast that new account openings would decelerate.
Aparna Chennapragada, Robinhood's product chief, said that the marketing push is a continuation of Robinhood's long-term mission to make investing accessible to people who hadn't historically participated in the markets.
The campaign, she said, is about "meeting the next generation where they are" and communicating that by starting young, college students can enjoy the benefits of compound returns over decades.
Courting students is tricky for Robinhood. Critics say the app has turned trading into a game-like experience that encourages unsophisticated investors to take risks they don't understand.
Robinhood settled a wrongful-death lawsuit earlier this year brought by the family of a college student who took his own life after believing he racked up big trading losses on Robinhood.
In June, the company agreed to pay nearly $70 million to resolve a regulator's allegations that it approved ineligible traders for risky strategies and didn't supervise its technology, which faced outages last year amid market volatility.
Robinhood neither admitted nor denied the claims.
Robinhood, Ms. Chennapragada said, has made a lot of investments in informational content this year in formats that younger investors can understand, like its Snacks newsletter.
In recent months, Robinhood also has bolstered customer support and eliminated its controversial digital confetti feature from its platform.
"A majority of young people are still not primed to think about investing," Ms. Chennapragada said.
Fueled by social media and free stock-trading platforms, more than 20 million new nonprofessional investors are estimated to have started trading on brokerages across the industry since the start of 2020, according to Devin Ryan, director of financial technology research at JMP Securities.
At Robinhood, Ms. Chennapragada said, the view is that there are many more potential customers who can still be turned on to investing, even though trading message boards on platforms such as Reddit have largely been quieter than they were earlier this year.
Robinhood's competitors are also chasing new customers.
JPMorgan Chase & Co. is revamping its online investing product. Fidelity Investments Inc. said earlier this year that it would offer investing and savings accounts to 13- to 17-year-olds whose parents or guardians also invest with the firm.