As we launch our brokerage ‘Trade App,’ I’ve been asked how the fact that commission-based revenue models for traditional brokerages are falling like dominos will affect Stocktwits and Trade App.
This move is exactly what we expected, what we’ve talked about, and why we spent the last two years building what will be the leading brokerage for younger new investors. We learned this by watching our large community of 2.8m young investors learn, share, and engage with each other for the last 10 years, with the community growing by leaps and bounds each year. If you remove friction, the market will expand as people age into having money to invest, and have new tools to learn to do so on their own.
Brokers are now realizing that free equity trading is table stakes, especially for people just getting started in investing.
What we know at Stocktwits, though, is that “free” is not nearly enough. Free may help people start, but it takes a social and community aspect to keep the next generation of investors engaged.
People today learn from each other, and Trade App provides this sharing and learning infrastructure. We also offer the ability to buy fractional shares in dollar amounts so newer investors with smaller accounts can afford to own shares of popular companies like Amazon and Google.”
Moving to free is exactly what was expected as friction and entry fees are removed in every industry, and while large brokers figure out how to (or if) they can replace that revenue, companies that are “commission-free-native” will have an advantage in building new business models from scratch, tailored to how the next generation of users want to consume and pay.