"It's not just the markets, and it's not just individual AI stocks [and] crypto. If you look at our retirement business, More and more people are interested in retirement as well. So we announced that we had in $1.7 billion in assets under custody in retirement accounts at the end of last year," Tenev explains. "And recently our CFO [Jason Warnick] was at a conference, he said that number had close to doubled, that over $3 billion just in a couple of months. So there's general interest in long-term investing as well and we're excited to be serving that market."
Tenev goes on to emphasize Robinhood's chief goals at the moment, including becoming "number one in the active trader market":
"But we don't want to just serve active traders. We want to grow wallet share, with our customers, we want to help them build wealth. And that's the second priority — that's where Robinhood Gold and our high-yield products come in, that's where retirement comes in, and, of course, the credit card where we're entering a new product category that's very important to customers. Then the third area of focus is expanding internationally."
Vlad Tenev, Robinhood co-founder and CEO joins me now. Vlad, always nice to get some time with you. I know you do a lot of these interviews, especially a couple of weeks after earnings. But I'm like I have to connect with Vlad because your stock is rallying, the broader market is rallying. On your platform, what have these record-setting markets done to that platform and what are you seeing among people?
VLAD TENEV: Typically, when the crypto markets see a lot of excitement, we benefit from that. We're one of the largest crypto platforms in the US. We've been growing market share and that's continued through 2023. I think last time I was on your show, we were talking a little bit about that.
But it's definitely not just crypto. We've seen increased levels of activity with the markets across all of our assets and products. So people have been entering the equity markets.
Options trading has been up through 2023 as well. Equities market share went up about 14%. Options market share at Robinhood was closer to 20% at about 19%. So as we've been improving our products we stand to benefit when there's heightened market interest.
BRIAN SOZZI: Have you seen the rally-- AI stocks, crypto, whatever it is is this pulling in the next generation of investors?
VLAD TENEV: I think you're seeing a couple of things. Certainly, there's heightened retail interest and you're seeing investment apps getting more downloads. You can look at the public App Store rankings and there has been a resurgence in interest in investing. Certainly, we've benefited from that.
But what's really interesting is it's not just-- it's not just the markets and it's not just individual AI stocks in crypto, you look at-- or retirement business, more and more people are interested in retirement as well. So we announced that we had $1.7 billion in assets under custody in retirement accounts at the end of last year. And recently, our CFO was at a conference. He said that number had close to doubled at over $3 billion just in a couple of months. So there's general interest in long-term investing as well and we're excited to be serving that market.
BRIAN SOZZI: Are investors still looking at Robinhood as a trading platform? Because I've been following a lot of the work that you and your team have done really over the past 12 months, a lot more innovation 24-hour trading, a push in different retirement products. Do you ultimately want to be that one-stop destination for-- that maybe perhaps replaces going down to your local bank branch and using it for whatever you want to use it for?
VLAD TENEV: There's three things that we're focused on right now. Number one, we want to be number one in the active trader market. So active traders are very important for us. They care about very specific things like performance, pricing, user experience. And we're making lots of investments there both in the user experience and in new product innovations that other competitors don't offer, 24-hour market being a great example there.
But we don't want to just serve active traders and so we want to grow wallet share with our customers. We want to help them build wealth. And that's the second priority.
And that's where Robinhood Gold and our high-yield products come in. That's where retirement comes in. And, of course, the credit card where we're entering a new product category that's very important to customers.
Then the third area of focus is expanding internationally. I think the last time I was at your show, we had just announced the UK launch. And we had also launched in the EU and we see a huge opportunity there. Hundreds of millions of consumers that are underserved and that's, sort of, our beachhead to the rest of the world.
BRIAN SOZZI: What is the size of that credit card business? How big could that be 12 months after launch? And where exactly are you with that product?
VLAD TENEV: One of the reasons we're so interested in the credit card market is it's so big, right? Over 80% of US adults have a credit card, at least one. There's hundreds of millions of credit cards in circulation in the US alone.
And if you look at the credit card market, in general, we see three things. Number one, it's large. Number two, the incumbents are enjoying very large margins so the profit pools in that business are very large. And the third is it hasn't really been digitized yet so the experience of a credit card, I mean sans Apple Pay, is pretty much the same as it was 20 years ago.
And when we see those three things, we see a great opportunity for us to enter the market and disrupt. So it's getting close. The team's been working hard. I've seen the designs. And we'll be looking forward to unveiling it shortly.
BRIAN SOZZI: Just before you came on, we had the opportunity to talk to a SEC Chair Gary Gensler. And towards the end of the conversation, they were talking a lot about crypto and the moves in crypto. The chair noting that the sector is rife with abuses and frauds, and at some point maybe the investing public is putting their own investments at risk. I mean bigger picture, what do you think about this move in crypto? And do you think investors truly understand what they're getting in the crypto space right now?
VLAD TENEV: I think if I had to look at this move, we see a supply and demand imbalance starting with Bitcoin, right? So all of these new ETFs came into the market, they've been gathering assets. We're now able to more easily plug institutional interest of which there is a lot in crypto and they've been generating more demand.
You also have the Bitcoin halving where there's less supply coming in and I think the market anticipates that. I do think the crypto space is quite broad. It refers to a lot of things now including just coins that a couple of software engineers overseas can launch on an exchange. And I think with that level of decentralization and sort of access are risks.
But then you look on the other side of the spectrum and there's significant institutional interest in adding Bitcoin and other cryptocurrencies into customers' portfolios. More and more large institutions and endowments are starting to look at it. Governments, you've seen, start to look at it too, like El Salvador, for instance. But I think we anticipate that might not be the end of that. And so I think that's very much entered the mainstream as an asset that customers need and look to add in their portfolios.
BRIAN SOZZI: Vlad, you've been leading this company really through a series of big moments for investors. Of course, a couple of years ago with the meme stock frenzy, but right now market's at all time highs, crypto all time highs. What lessons are you putting to play today, leadership, operationally, whatever it might be, things that you learned a couple of years ago? What are you putting into play now?
VLAD TENEV: Yeah, I mean, a couple of years ago felt like a different world, you know. It felt like we didn't really have to operate particularly well as a company to do well. In COVID times, the tide sort of lifted all boats.
Now starting in 2022 with the increase in interest rates, it, sort of, washed out a lot of the excess in the markets and we've had to operate differently. So just emphasizing efficiency, performance, focusing on the things that are incredibly important, making sure that the team is aligned, and we've got the top talent, I think these are all things that the management team and myself have learned over the past couple of years. And now when we see a little bit of a recovery and if interest rates then start dropping as many are predicting, we should see that turn into a tailwind for the business in a big way.
BRIAN SOZZI: It's always great to get a few minutes with you. Thank you always for making time for Yahoo Finance. Vlad Tenev, Robinhood co-founder and CEO, have a good weekend. We'll talk to you soon.
VLAD TENEV: Thanks, Brian.
