Is Robinhood’s New Media Venture Actually ‘Brilliant’?

Sherwood, Robinhood's new media division, could help re-engage investors and attract advertisers interested in its user base of young, risk-tolerant consumers.

The Robinhood logo appears on a phone screen.
Robinhood invests in media. SOPA Images/LightRocket via Gett

Robinhood, a stock trading app, announced it would launch an independent media publication called Sherwood Jan. 17 to report on business and finance.

The trading company’s venture into media began in 2019 when it acquired MarketSnacks, which produced Robinhood’s hit daily newsletter, Snacks. Snacks, which is sent to Robinhood’s users unless they unsubscribe, has 40 million subscribers—four times the number of people who pay for the New York Times. The newsletter will be transferred to Sherwood, which means the company’s new media branch will begin with a massive existing audience. But just like there is risk in stock trading, starting a media company during the present economic downturn is a gamble.

In anticipation of a recession, advertisers have slowed their spending, which has impacted many media publications’ primary revenue stream. More than a dozen major media companies have cut costs, laid off employees or shuttered altogether in recent months. Advertising is going to continue to decrease throughout the 2023 year, according to Katherine Cartwright, co-founder of Criterion Global, a media buying agency. From its inception, Sherwood will have to compete in a crowded marketplace with companies already struggling to make ends meet.

Despite this, “it is a brilliant move from a media standpoint,” Cartwright said. Robinhood’s usage has been dipping, she said, and a media division can help earn revenue from those engaging with its content. Despite media being an uncertain business right now, it has higher profit margins than fintech, she said.

The trading app’s monthly active usership has decreased 35 percent year over year to 12.2 million. And despite having a large newsletter audience, Robinhood hasn’t published recent open rate statistics, so it is unclear how many subscribers are readers. Robinhood didn’t respond to the Observer’s interview request.

Robinhood is a shaky investment

Robinhood claims to democratize investing but has been the subject of controversy in recent years. Most notably, after meme stock GameStop skyrocketed in 2021, the app abruptly halted buying but not selling, which drove the price down and caused lingering blowback from users. Critics say the company gamified the investing experience, which puts inexperienced investors’ money at risk. But this is precisely the phenomenon that could attract advertisers, Cartwright said.

“Robinhood, for better or worse, is controversial, but they have a loyal following of millennials and Gen Z,” she said. It is increasingly difficult to advertise to these groups because influencers aren’t always reliable and young people are moving to platforms like Discord that don’t allow ads. By targeting Robinhood users through Sherwood, advertisers can reach the anti-establishment, risk-tolerant consumers who are willing to spend money, she said.

Advertising with companies like Meta used to get relatively assured returns, but that hasn’t been the case since Apple changed its policies in 2021 and limited apps’ abilities to track consumer behavior, Cartwright said. Media buyers can no longer guarantee returns on the platforms that used to dominate the advertising space. “Something new and exciting is a hot commodity for advertisers,” she said, even in a struggling media economy.

Update: This article has been updated to clarify Katherine Cartwright’s explanation of how Sherwood could generate revenue for Robinhood. Is Robinhood’s New Media Venture Actually ‘Brilliant’?