As Zero-Fee Losing Luster, Robinhood Launches Fractional Shares
- The move comes as Robinhood tries to woo its younger investors, which exploded to more than 10 million.

Robinhood investment app, mostly used by millennials to trade stocks and cryptocurrency, is now offering its customers the ability to buy and sell fractional shares with as little as $1. The “fractional stock” feature allows small-bucks investors to diversify their portfolios by spreading their relatively small capital over a broader range of stocks.
The move comes as Robinhood tries to continue to woo its younger investors, which exploded to more than 10 million. Six years after Robinhood launched with no-fee trading, major brokerages were catching up with a wave of fee-eliminating announcements over the past two months. In the span of just a few weeks, nearly all US online brokers eliminated commissions, which could be a direct hit to the Startup Startup A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is created by at least one or more entrepreneurs. These seek capital as a means to bypass a limited availability of capital and combat high costs. This is why startups seek funding from funding rounds, crowdfunding, venture capitalists, financial institutions, or other sources. What Makes Startups Successful?Given the fact that most startups fail, the first three years of a startup are critical which is why startup founders require capital for talent acquisition, creating effective business models and plans.In parallel it is important to provide proof-of-concept for the long-term through an established user base and consistent revenue streams. Many startups use seed funding, which occurs during the first stage of funding rounds, where fundraised capital is used to conduct market research and product or service development.Sometimes, startups go through an acquisition process, where they merge larger companies competing in a similar industry. Companies that generate less than $20 million annually, possess less than 80 employees, and are primarily controlled by the founding entrepreneur(s) are generally classified as startups. Today, some of the world’s most successful companies started as startups, such as Facebook, Uber, and SpaceX to name a few. A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is created by at least one or more entrepreneurs. These seek capital as a means to bypass a limited availability of capital and combat high costs. This is why startups seek funding from funding rounds, crowdfunding, venture capitalists, financial institutions, or other sources. What Makes Startups Successful?Given the fact that most startups fail, the first three years of a startup are critical which is why startup founders require capital for talent acquisition, creating effective business models and plans.In parallel it is important to provide proof-of-concept for the long-term through an established user base and consistent revenue streams. Many startups use seed funding, which occurs during the first stage of funding rounds, where fundraised capital is used to conduct market research and product or service development.Sometimes, startups go through an acquisition process, where they merge larger companies competing in a similar industry. Companies that generate less than $20 million annually, possess less than 80 employees, and are primarily controlled by the founding entrepreneur(s) are generally classified as startups. Today, some of the world’s most successful companies started as startups, such as Facebook, Uber, and SpaceX to name a few. Read this Term that kicked off the trend in 2013.
Bigger online brokerage houses have already introduced fractional stock ownership as a way to lure younger retail investors. Charles Schwab was the first among US major brokers to announce it would be allowing investors to buy and sell fractions of stocks. As they look beyond the no-fee trading war, the move has set off a new rush among other brokers to do the same amid increased competition in the industry to attract the next generation of investors.
No legs up on Robinhood now
Before today, these brokers did have one leg up on Robinhood, as the Silicon Valley company hadn’t supported fractional share trading yet.
Robinhood, whose mobile app lets users buy and sell public stocks without trading fees, said that move would be a win for investors who are handling small amounts of money. It also helps those who want to invest a certain amount of money each month into high-priced stocks like Apple, Amazon, Alphabet, and Tesla.
Considering the new bar set by Schwab, as well as responses of Interactive Brokers and Robinhood, other players, including E*Trade, TradeStation, and Fidelity, could follow suit on fractional trading in the next few weeks.
The move, geared toward attracting more young clients, eliminates the barriers that many investors face as the brokerage split whole shares intentionally so they can sell fractional shares to clients.
Robinhood investment app, mostly used by millennials to trade stocks and cryptocurrency, is now offering its customers the ability to buy and sell fractional shares with as little as $1. The “fractional stock” feature allows small-bucks investors to diversify their portfolios by spreading their relatively small capital over a broader range of stocks.
The move comes as Robinhood tries to continue to woo its younger investors, which exploded to more than 10 million. Six years after Robinhood launched with no-fee trading, major brokerages were catching up with a wave of fee-eliminating announcements over the past two months. In the span of just a few weeks, nearly all US online brokers eliminated commissions, which could be a direct hit to the Startup Startup A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is created by at least one or more entrepreneurs. These seek capital as a means to bypass a limited availability of capital and combat high costs. This is why startups seek funding from funding rounds, crowdfunding, venture capitalists, financial institutions, or other sources. What Makes Startups Successful?Given the fact that most startups fail, the first three years of a startup are critical which is why startup founders require capital for talent acquisition, creating effective business models and plans.In parallel it is important to provide proof-of-concept for the long-term through an established user base and consistent revenue streams. Many startups use seed funding, which occurs during the first stage of funding rounds, where fundraised capital is used to conduct market research and product or service development.Sometimes, startups go through an acquisition process, where they merge larger companies competing in a similar industry. Companies that generate less than $20 million annually, possess less than 80 employees, and are primarily controlled by the founding entrepreneur(s) are generally classified as startups. Today, some of the world’s most successful companies started as startups, such as Facebook, Uber, and SpaceX to name a few. A company operating within its first stage of investing is known as a startup. While startups may give the impression that the company must be new, that is not always the case.Many companies can have this designation after nearly three years of existence. Typically, a company exits the startup status after a period between 3 to 5 years or after successful funding rounds where capital is acquired. Startups tend to derive out of the belief that there is a demand for a service or product which is created by at least one or more entrepreneurs. These seek capital as a means to bypass a limited availability of capital and combat high costs. This is why startups seek funding from funding rounds, crowdfunding, venture capitalists, financial institutions, or other sources. What Makes Startups Successful?Given the fact that most startups fail, the first three years of a startup are critical which is why startup founders require capital for talent acquisition, creating effective business models and plans.In parallel it is important to provide proof-of-concept for the long-term through an established user base and consistent revenue streams. Many startups use seed funding, which occurs during the first stage of funding rounds, where fundraised capital is used to conduct market research and product or service development.Sometimes, startups go through an acquisition process, where they merge larger companies competing in a similar industry. Companies that generate less than $20 million annually, possess less than 80 employees, and are primarily controlled by the founding entrepreneur(s) are generally classified as startups. Today, some of the world’s most successful companies started as startups, such as Facebook, Uber, and SpaceX to name a few. Read this Term that kicked off the trend in 2013.
Bigger online brokerage houses have already introduced fractional stock ownership as a way to lure younger retail investors. Charles Schwab was the first among US major brokers to announce it would be allowing investors to buy and sell fractions of stocks. As they look beyond the no-fee trading war, the move has set off a new rush among other brokers to do the same amid increased competition in the industry to attract the next generation of investors.
No legs up on Robinhood now
Before today, these brokers did have one leg up on Robinhood, as the Silicon Valley company hadn’t supported fractional share trading yet.
Robinhood, whose mobile app lets users buy and sell public stocks without trading fees, said that move would be a win for investors who are handling small amounts of money. It also helps those who want to invest a certain amount of money each month into high-priced stocks like Apple, Amazon, Alphabet, and Tesla.
Considering the new bar set by Schwab, as well as responses of Interactive Brokers and Robinhood, other players, including E*Trade, TradeStation, and Fidelity, could follow suit on fractional trading in the next few weeks.
The move, geared toward attracting more young clients, eliminates the barriers that many investors face as the brokerage split whole shares intentionally so they can sell fractional shares to clients.