Robinhood Is Going Public. It’s Time to Talk About Investing in Black-Owned Businesses

Robinhood filed to go public in March 2021. Stock in the company will be available for investors to buy at some point in April or May. 

OK, you might be asking, what’s Robinhood? It’s an online platform that allows individuals to easily get into the stock market. It offers fee-free investing and a way to purchase fractions of expensive shares, so people can buy stock in companies like Tesla, Apple, or Google without having to spend hundreds of dollars on whole shares. 

Last year, to stay competitive, the big brokers followed Robinhood’s lead and made fee-free investing the new normal. Today, a small investor can open an account and take advantage of commission-free, self-directed investing on traditional investing sites, such as Schwab or Fidelity.

People who used to avoid the stock market, put off by the companies’ fees, could now buy stocks without those barriers. The change became highly significant during the pandemic. Many people were financially stressed. And many were spending time at home with their phones or laptops. It was the perfect storm to send a surge of small investors into the stock market. Word got out. According to the Financial Times, 2021 is proving to be a “breakthrough year” for individual investors. At times, a third of the stock trades are being made by small investors.

Finding Black-Owned Companies in the Stock Market

Small investors behave differently than institutions. Many individual investors look for shares in companies they’re actually passionate about. For example, some individual investors make it a point to seek out Black-owned companies when selecting stocks. On this point, the effects of generations of systemic racism become relevant. While nearly 18% of the country’s population is Black, fewer than 6% of U.S. businesses are Black-owned. Of those, only a handful are listed in the public markets.