What is Webull, the Chinese app taking on Robinhood?

What is Webull, the Chinese app taking on Robinhood?
Source: Shannon Stapleton, Reuters
Apps like Robinhood and Webull have democratized trading at an unprecedented level.

Is the Robinhood revolution over? That’s the question many are asking after the last couple of weeks.

It was through Robinhood Markets, Inc. that insurgent traders inspired by a Reddit thread began buying shares of GameStop Corp. at such a high rate that the game retailer, which many believed would fail, instead became a US$10 billion company.

But the fantasy ended when Robinhood halted the GameStop revolt of 2021, leaving angry and anxious investors to look for an alternative to the app. For a time, they thought they’d found it in the Chinese digital trading app Webull.

Webull Financial LLC was established in 2016 and began operations the following year. It was founded by Wang Anquan, a former executive at Chinese e-commerce monolith Alibaba Group Holding Limited who later became an executive at smartphone maker Xiaomi Corporation. Wang went on to start Fumi Technology, Webull’s parent company.

Like Robinhood, Webull charges zero in commission and experienced rapid growth last year.

The similarities between the two apps led to a brief period of investors abandoning Robinhood in favor of Webull. After Robinhood halted transactions of GameStop and AMC Entertainment Holdings, Inc. stock, investors thought they could move to Webull and continue the trend. They would soon be disappointed as the same market forces that put a stop to the GameStop renaissance on Robinhood did the same at Webull.

As a result, investors wanting to bypass Robinhood restrictions will not be able to do so at Webull. But that does not mean Webull will sink into obscurity – quite the opposite.

Regardless of the current situation with GameStop and AMC that led to the explosion in Webull’s popularity, the golden era for fintech companies like Webull and Robinhood began with the pandemic.

Trading apps like Robinhood are designed to invite new traders because of their ease of use and zero commissioning fees. Millions flocked to the app last year largely because of the COVID-19 pandemic. Robintrack, a third-party website not affiliated with Robinhood, was established with the purpose of watching the trading app’s astronomical rise in popularity.

Apps like Robinhood and Webull have democratized trading at an unprecedented level. Investing in the stock market, formally an expensive, complicated endeavor, changed as apps like Robinhood and Webull simplified the process while offering zero commission fees. This has attracted investors in their late 20s and early 30s.

Despite the recent controversy that convinced many to abandon Robinhood for Webull, Robinhood’s popularity is still rising and the company continues to lead the trading app market.

This January was the best month on record for Robinhood, with the app scoring more than three million downloads, while Webull had more than 800,000 downloads.

At one-point, Webull became the second-most popular app on Apple’s app store, coming behind Robinhood. Downloads of Webull were up 1,548% compared with the average week. However, Webull does have some unique challenges.

The geopolitical environment is not lost on some traders. Technological encroachment remains a key concern for those doing business with Chinese firms and the specter of a Chinese tech company operating within the United States financial market seems too risky for many investors to buy into, driving them to alternatives to Robinhood that are American.

In an interview with Bloomberg last December, Webull chief executive officer Anthony Denier tried to reassure investors.

“Webull Financial is a US-brokered dealer, we’re regulated by the SEC and FINRA, and we’re a completely separate entity than our parent company,” adding, “In the US we’re simply a broker dealer taking on US customers, keeping all of their data in the US, having all registered people in the US deal with their account.”

With these geopolitical tensions in mind and the GameStop extravaganza soon to be behind it, Webull has its eyes set on the future.

The trading platform plans to expand to Asia, Europe and Latin America in the coming years as digital trading among its target demographic continues to rise in popularity. While it trails Robinhood in overall popularity, the young app is still home to over two million users.

Webull is part of an industry that has revolutionized finance and given more power to people who otherwise would have faced prohibitive barriers to entry.

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