Freetrade, Britain’s answer to Robinhood, hits breakeven

Freetrade, Britain’s answer to Robinhood, hits breakeven

The Freetrade logo on a smartphone screen.

Rafael Henrique | Sopa pictures | Light rocket | Getty Images

British stock trading app Freetrade broke even earlier this year, the company told CNBC, marking its first ever breakeven after posting full-year losses in 2023.

Freetrade reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of £100,000 ($124,863) in the first quarter of 2024, according to unaudited financial reports shared with CNBC.

Preliminary sales for the quarter were £6.7 million.

Freetrade still made a loss of £8.3 million in 2023, compared to the loss of £28.8 million the year before. Sales rose to £21.6m last year, up 45% on 2022.

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

Equity crowdfunders rejoice

The development will be welcome news for Freetrade’s crowdfunding investors, who have been looking for an update on the company’s trajectory towards profitability following a difficult financial period.

Freetrade’s value fell 65% in its latest equity crowdfunding round on Crowdcube to £225m ($280.3m) from £650m in 2023, with the company citing a “different market environment” with higher blamed interest rates and inflation.

Net inflows also totaled £130m in the first quarter as retail investor activity increased in response to the recovery in markets last year. Assets under management also totaled £1.8 billion.

“It is important to our crowdfunding investors that we demonstrated a clear path to breakeven in our last fundraising campaign,” Dodds said.

“As we look to the remainder of 2024, we have important product developments ahead that will support our next phase of growth as we currently prepare to launch our web platform.”

Stock markets saw sharp declines in 2022 due to macroeconomic uncertainty and higher interest rates triggered by Russia’s full-scale invasion of Ukraine, leading to risk-off trading worldwide.

Britain’s answer to Robinhood

Freetrade is a competitor to Robinhood, the US stock trading platform. Robinhood recently relaunched in the UK in March, marking its third attempt to enter the European market.

Freetrade’s Dodds said he was unimpressed by Robinhood’s return to the UK, telling CNBC via email that “more choice and competition is good for retail customers.”

“Ultimately there will be multiple winners in the UK market, offering the full range of tax packaging and features that the local retail investor expects,” he added.

Freetrade said its first quarter performance was driven by higher trading volumes as well as higher foreign exchange income.

Freetrade said it has seen a significant increase in retail investor participation since October 2023 amid speculation about when and how often the Federal Reserve and other central banks will cut interest rates this year.

A rally in crypto prices also helped Freetrade in the first quarter. Although the platform does not offer crypto trading, Freetrade has seen increased activity from retail investors in crypto-correlated stocks like Coinbase, MicrostrategyAnd Marathon Digital.

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2024-04-15 11:02:11