Robinhood Markets Inc.: Business Model Challenges

In late January 2021, Robinhood Markets Inc. (Robinhood), the California-based start-up that had upended the securities brokerage industry with its zero-commission trades, faced legal and market challenges. The US Securities and Exchange Commission had imposed a hefty fine on the company for its inadequate disclosure of payments to market brokers. In addition, a state regulator had filed an administrative complaint about the start-up's "gamification" of investing that had arguably led unwitting customers to lose money. A huge run-up in the stock of GameStop Corp. had put the spotlight on Robinhood and its business practices. On the competitive front, both traditional brokers such as Charles Schwab Corporation and Webull Financial LLC, a China-based start-up, were challenging Robinhood for the millennial investor customer base. Robinhood’s co-founder and chief executive officer, Vladimir Tenev, and his team needed to respond to these challenges so the company could file papers in March 2021 for a mid-2021 initial public offering.

The case is suitable for strategy courses at the undergraduate and graduate levels. The case can also be used in an executive education strategy course. By working through the case and assignment questions, students will have the opportunity to do the following:<ul><li>Examine a company's business model, the viability of its individual components, and the interrelationships among the components.</li><li>Understand the nature of platform businesses, as well as their strengths and the challenges they face.</li><li>Identify the importance of both market and non-market forces that affect a company's strategy.</li></ul>

• Platform businesses
• business model