The news: Robinhood is having an incredibly high-growth year after reaching profitability in 2024, per ABC News. That’s because it’s regularly rolling out new products that are appealing to consumers.
The products: Earlier this year, Robinhood announced it would launch traditional banking services to compete with traditional US financial institutions. The company reported that it would institute cash-delivery services this fall. We predicted that this move, already advertised on Robinhood’s website, would resonate especially well with younger consumers.
Robinhood also recently launched a nationwide sports "financial derivatives” tool to bypass individual state gambling laws and licensing requirements, per SportsEntrepreneur. Unlike conventional sportsbooks, where users bet against the house, Robinhood allows users to trade sports event contracts with each other, enabling them to buy and sell positions at any point during a game, like trading a stock.
The response: Robinhood announced it would join the S&P 500 later this month after its stock showed steady growth since dipping in 2023. And its stock price has surged, especially since announcing its sports betting platform, per ABC News. But that product has caused friction.
The National Football League and National Collegiate Athletic Association have expressed concerns about a lack of regulatory oversight and the potential threat to the integrity of their respective sports following the financial derivatives tool launch. State regulators in Nevada and New Jersey are taking legal action, and the Wisconsin Ho-Chunk Nation and other tribes have filed a lawsuit.
Our take: Some of the risks that Robinhood is taking are boosting its profitability, while others are causing regulatory headaches or legal battles. However, each new launch drives more traffic toward its all-in-one app, improving customer acquisition efforts. For example, new customers who want to try sports betting may stay for the cash delivery service or crypto products.
While some products may not always succeed, the fintech’s strategy to keep trying new approaches could still land it with a growing super-app.