Robinhood Filing Shows Enormous Growth in Controversial Revenue Source

Robinhood Filing Shows Enormous Growth in Controversial Revenue Source

Text size

Robinhood had a tumultuous first quarter that led to its CEO testifying before Congress,  but it is becoming clear it was also an enormously lucrative period for the company.

A federal securities filing shows that Robinhood was paid $331 million by market-makers that execute stock and options orders for the broker’s clients in the first quarter, when the



GameStop



frenzy grabbed hold of the market. That is up from $91 million in the first quarter of 2020.

This kind of revenue, called payment for order flow, has become a more important way for brokers to make money now that they don’t charge commissions on each trade. Robinhood doesn’t release its full revenue or expense numbers, so the filings are the clearest window into its operations. They show that Robinhood is on track to make well over $1 billion in revenue this year and perhaps more than $2 billion, should this level of activity hold up. 

That said,