Freetrade, Britain’s Counterpart to Robinhood, Achieves Maiden Quarterly Profit in Recent Financial Report

According to the company’s announcement to CNBC, Freetrade a British stock trading app finally broke even earlier this year. This marks the first time they’ve made a profit after losing money in 2023.

In the first quarter of 2024, Freetrade reported making £100,000 ($124,863) in adjusted earnings before interest, tax, depreciation, and amortization (EBITDA), as shown in unaudited financial statements shared with CNBC. Their revenue for the quarter reached £6.7 million.

Net inflows totaled £130 million in the first quarter of 2024. (Credits: Freetrade)

Despite this progress, Freetrade still ended up with a loss of £8.3 million in 2023. However, this is an improvement from the £28.8 million loss they had the year before. Their revenues for 2023 rose to £21.6 million, which is a 45% increase from 2022.

CEO and founder of Freetrade, Adam Dodds, said, “We defied difficult market conditions and delivered healthy growth in 2023 while dramatically reducing losses” compared to 2022.

Reaction of The Crowdfunding Investors

Freetrade’s progress toward profitability brings good news for its crowdfunding investors. They’ve been eager for updates on the company’s financial health after a challenging period.

In its latest equity crowdfunding round on Crowdcube, Freetrade’s value dropped by 65% to £225 million ($280.3 million) from £650 million in 2023. The company attributed this decrease to a “different market environment” affected by higher interest rates and inflation.

Freetrade’s valuation dropped by 65% in the 2023 equity crowdfunding round. (Credits: Freetrade)

In the first quarter, there was a net inflow of £130 million as retail investors became more active in response to improving markets last year. Freetrade’s assets under administration also reached £1.8 billion.

CEO Dodds emphasized the company’s commitment to reaching profitability during their last fundraising. Looking forward to 2024, Freetrade plans significant product developments to support its growth, including the rollout of a web platform.

In 2022, equity markets experienced significant declines due to macroeconomic uncertainty and higher interest rates, partly fueled by Russia’s invasion of Ukraine, which caused global risk aversion.

What was the Response of the UK to Robinhood?

Freetrade is often compared to Robinhood, a popular U.S. stock trading platform. Robinhood recently made a comeback in the U.K. in March, marking its third attempt to break into the European market.

Increased retail investor activity observed since October 2023, driven by market speculation. (Credits: Freetrade)

Despite Robinhood’s reentry, Freetrade’s CEO Dodds remains optimistic, stating that “more choice and competition are good for retail customers.” He believes that the U.K. market can accommodate multiple successful platforms offering a wide range of features for retail investors.

Freetrade attributes its strong performance in the first quarter to increased trading volumes and higher foreign exchange income.

Since October 2023, Freetrade has observed a significant rise in retail investor engagement, driven by speculation about potential interest rate cuts by the U.S. Federal Reserve and other central banks this year.

Additionally, the surge in cryptocurrency prices benefited Freetrade in the first quarter. Although Freetrade doesn’t offer cryptocurrency trading, it saw increased activity from retail investors in stocks correlated with cryptocurrencies, such as Coinbase, MicroStrategy, and Marathon Digital.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
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