More than 200,000 Robinhood users are “already in line” for fractional stock trading on the app in the few hours since it announced the service, co-CEO Vladimir Tenev told CNBC’s Jim Cramer on Thursday.
“The early signs are really promising,” Tenev said on “Mad Money.” “We just have to keep focus on what we’ve always been focused on, which is keep reducing friction and be the best place possible for new investors to start investing.”
Users will officially be able to invest in fractional shares beginning next week, giving them the ability to own a piece of a share in popular companies such as Amazon — which closed Thursday at $1,760 per share — for as low as $1.
“In particular, with this feature, we see customers’ eyes light up when they deposit $10 or $100 and the entire universe of stocks that they would like to invest in, or stocks that represent companies that make products they love, is available to them,” Tenev said.
Robinhood follows in the footsteps of Charles Schwab and Square. Both firms announced options for fractional stock trading in recent months.
With its zero-commission trading since it launched in 2015, Robinhood, by contrast, has helped accelerate many of its competitors in the brokerage industry to also embrace no-fee trading.
In October, Schwab, TD Ameritrade, E-Trade, and Interactive Brokers cut fees to zero. Schwab has since announced plans to acquire TD Ameritrade.
The goal of fractional stock trading is lowering the barrier to entry, and Tenev noted it fits squarely with Robinhood’s fundamental mission of democratizing investing.
When SoFi announced the feature this summer, it said positions in the three most popular stocks valued over $100 increased significantly, with Amazon ownership rising 271%, Apple rising by 59% and Disney by 32%.
Robinhood, last valued at $7.6 billion, now has 10 million accounts. The median age of users is 30, and more than half are first-time investors, Tenev said.
Tenev co-founded Menlo Park, California-based Robinhood in 2013 with fellow CEO Baiju Bhatt.
In early 2020, Robinhood will roll out features for dividend reinvestment and recurring investments, Tenev said.
“I think if we can help other young people especially capture some of the magic of being an investor in the company, and actually feeling like you’re part of that company and the products, will lead to an overall healthier economy and a much better informed investing public,” Tenev said.
Disclosure: Cramer’s charitable trust owns shares of Amazon.com, Disney and Apple.
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