Robinhood emboldens everyday shareholder engagement with latest acquisition

The news: The Nasdaq-listed trading app bought investor communication platform Say Technologies for $140 million, per its press release.

Why buy Say Technologies? Its digital platform facilitates communication between shareholders and the companies they’ve invested in.

Say Technologies’ Q&A solution lets investors participate in events like earnings calls so they can ask questions to the directors of the companies they hold shares in. It also simplifies proxy voting, which usually relies on a complex chain of financial intermediaries that pass information between companies and their shareholders and is often difficult to access for individual investors.

What’s in it for Robinhood? The acquisition should boost its average account size and revenues.

  • Average account size. The average account size on Robinhood is about $5,000, compared with $25,000 for Charles Schwab. This is because amateur, small-time investors are Robinhood’s most common users. They invest small amounts frequently and often with little understanding of a company’s fundamentals. But facilitating shareholder communication can pique their interest in the companies they’ve invested in and get them more involved—and perhaps investing more. The solution could also attract more experienced investors and deep-pocketed who are likely even more interested in being proactive shareholders.
  • Revenues. While there are no details yet regarding how it will integrate Say Technologies’ tools, Robinhood may add them to its paid subscription service, Robinhood Gold. This offers premium features for $5 a month, like instant access to deposits and margin investing. The number of Gold subscribers grew from 300,000 in Q1 2020 to 1.4 million in Q1 this year, and additional features like improved investor communication could further boost membership.

Looking ahead: The acquisition heralds the next trend in democratizing retail trading—facilitating shareholder engagement.

Robinhood is something of a trendsetter. It was among the first to do away with commission fees and introduce fractional share trading, which pushed incumbents like TD Ameritrade, E*Trade, Fidelity, and JPMorgan Chase to slash their own fees and bolster their digital capabilities.

With the latest acquisition, Robinhood is further empowering retail investors to participate in the stock market, and this should again act as a catalyst for other market players to similarly improve shareholder communication.