Overview
Webull is a FinTech startup that allows customers to trade financial instruments like stocks or exchange-traded funds (ETFs) without paying a fee.
The firm was founded in 2017. Presently, it has risen to be one of the most prominent digital brokerage platforms in the United States, with more than 2 million users.
Company Profile
| Company Name | Webull Financial LLC |
| Website | https://www.webull.com |
| Founded | 2017 |
| Founders | Anquan Wang |
| Key People | Anquan Wang – Founder, Anthony Denier – CEO, Shen Lu – Chief Operating Officer Will Kohler – Investor |
| Headquarter | New York, New York, United States |
| Company Revenue | $15.87 million |
| Key Competitors | Overview of alternatives, moomoo, Robinhood, SoFi Invest, Alpaca Trading |
What is Webull? A Brief History
Webull is an online brokerage platform that supports mobile trading, let alone the typical desktop-conquered industry. Users don’t have to learn complex trading platforms like DAS Trader or Sterling Pro to trade stocks and other financial products like ETFs straight from their phones.
The company, based in New York City, was founded in 2017. The company developed from Fumi Technology, a Hunan-based (China) startup launched in 2016 by Wang Anquan.
Anquan used to work in finance for the duration of his professional career. He entered Alibaba Group in 2006 and then became a technical director at Ali Financial and a director of Taobao’s Loan Division.
How Does Webull Work and What Does it Offer?
Without minimum deposit and commission-free trades boosted, the platform’s user base. Stocks, cryptocurrency, and commodity trading are among the services provided by Webull. Cash and margin accounts with a self-directed Individual Retirement Account (IRA) can be traded on the platform.
Members can buy stocks, exchange-traded funds (ETFs), currencies (both physical and virtual, notably cryptocurrencies), and other commodity markets such as metals and animals in addition to stocks.
Other advantages also feature analytical tools such as various technical metrics or sophisticated charting, longer trading hours (both pre-market and after hours), and the possibility to trade from a broker or an IRA account.
You may use the application on a Mac, Windows, or Linux computer or an iOS or Android mobile device.
Webull Business Model
Webull aimed to boost its validity in the sight of the American market as a Chinese trading app.
The user base grew as many Robinhood users transferred to its trading platform with the negative news surrounding Robinhood following the GameStop scandal in early 2021.
Its user base began to thrive rapidly. For business promotion, the company employs an influencer-based strategy. The move was brilliant, propelling the company to the top of the market versus other market leaders like Robinhood.
During the 2020 pandemic, the company’s user base and AUM increased significantly. As a result of the reaction against Robinhood, Webull’s user base grew to 2 million in 2020, up from 200,000 the previous year.
The firm continues to develop, with future intentions to provide a Robo-advisory service.
Webull Unique Selling Propositions
The trading corporation offers free trading on most items, which is becoming increasingly popular in today’s trading market. The program has created an ETF and stock matching service to save trading expenses.
Here are some of the platform’s unique selling propositions:
- Minimum deposit: Based on the investment instrument chosen, the minimal deposit and amount requirements may differ. There is no minimum necessary to establish an account to begin investing.
- Fees: They can differ depending on the investment vehicle chosen. Trading has no commissions, but trading activities and regulated transaction fees may apply.
- Bonus: Whenever you register and fund a new account, you will receive 5 free stocks:
- Investment vehicles: Traditional, Roth, and Rollover IRAs
- Investment options: It offers stocks, ETFs, fractional shares, trading options, ADRs, IPOs, and cryptocurrencies.
- Educational resources: on the blog.
Unlike some of its competitors, it allows consumers to swap options contracts for no charge. Several other brokerages charge nominal fees for trading options contracts, which is standard practice.
It is the ideal platform for beginner and professional traders alike. No other software appears to fill this market need: a user experience capable of addressing the demands of experienced traders with research tools and adequate stock analysis for traders.
Apps for this specific niche market didn’t exist before their release. This stretches the app’s attractiveness to a broader range of users.
How Does Webull Make Money?
Webull makes money by paying High-Frequency Trading Firms (HFTs) for order volume, enabling them to profit from the differential between buying and selling shares. They also make money via short-selling fees, interest on margin accounts, and subscription fees paid by platform users.
Payment For Order Flow
There is no direct connection between WeBull and the market when a user places a transaction.
The firm uses a market maker, HTF business, to execute the order. HFTs can use this model to trade the stock at a spread and earn commissions on their trades.
The HFT bank that processes your order will sell it to other brokers in nanoseconds, earning from arbitrage between the “spread” or buying and selling price.
The market maker pays a commission to the firm for delivering its order flow, and the two companies work together to settle trades.
Subscriptions
By providing superior trading and charting tools, Webull created a reputation. Dealers on the platform now have access to market-depth data at Levels 2 and 1, which isn’t accessible from rivals like Robinhood.
Level 1 data is available without charge. To have access to Level 2 data, the app requires a monthly subscription charge of $1.99.
Margin Trading
Webull provides margin trading, allowing customers to build up a small balance quickly. To achieve more significant profits, traders might use margin trading.
For example, it is possible to acquire up to $300 worth of shares at a 3:1 margin. Interest on margin loans also generates money for the platform.
To use the short-selling function on the app, traders must have a margin account. As long as the shares are held in the deal, the trader pays interest on them.
Cash Income
Unlike a bank, Webull does not have FDIC insurance for its assets under management. The app has SIPC and Apex Clearing House insurance policies that cover up to $150 million in securities and $900,000 in cash on hand.
Webull SWOT Analysis
SWOT analysis is a distinguished method of business evaluation that may reveal valuable information about a company’s prospects. Now let’s use this analysis to examine Webull’s investment potential from all four angles.
Strengths
- Commission-Free Trading Cost: No commissions on stocks, options, ETFs, or cryptocurrencies with Webull.
Additionally, investors may take advantage of IPOs and fractional shares, making it easier to get in on a firm before it goes public or acquire a portion of a share belonging to a well-known stock.
It also offers no account minimums, and customers do not need to attain a minimum to begin investing.
- Cutting-Edge Technology: The company distinguishes itself primarily by its user-friendly, commission-free trading interface and retirement-saving accounts.
If you are new to stock trading, there is a helpful Webull blog where you can learn about understanding cryptocurrencies or the fundamentals of trading in the “education” area.
On top of that, if you want to trade on a larger screen, the platform also provides a customizable desktop version of its platform, and investors enjoy broadly extended trading hours before and after the market shuts.
- Handy Platform For Both Beginner And Experts: It provides robust pricing metrics, graphs, screeners, and customization than Robinhood and other more basic investing applications.
Their app is free to download from the App Store (for iOS), with 4.7/5 ratings, and Google Play (for Android), where it has 4.4/5 stars at the time of writing.
Weaknesses
- User’s Lack of Knowledge: People in various parts of the nation are uninformed about trade. It does not give stock recommendations or suggestions, which may make the experience of a novice trader more challenging.
- Customer Service: Due to the platform’s fully online nature, there are no personal relationship controllers or research advising services. It also does not offer customer care 24 hours a day, seven days a week.
- Tough Competition: The stock market is highly competitive. Firms face severe rivalry, which is fundamental in all businesses. Webull must concentrate on conquering competition and standing out from the crowd.
Opportunities
- Accumulated Customer Base: Webull has attracted many investors, and with increasing exposure, there will be prospects for customer base development.
- Market Research: By extensively analyzing market conditions, the organization could deliver customized brokerage services while improving the current investor experience.
- Brokerage Knowledge Expansion: There is a rising potential for stock brokerage businesses as educational development and federal regulation is targeted at teaching investors and improving trading awareness among the general public.
- Influencer-Based Marketing Strategy: These recommendations are the best way to grow the firm. Consequently, it is possible to avoid paying for unnecessary promotions.
Instead, it expects satisfied customers to recommend the company to their friends automatically. So, technology and customer service are more critical to Webull than ever before.
Threats
- Government Policies: Government policies in many countries change regularly. Likewise, political unrest in the nation may interrupt trade cycles and harm stock markets.
- Replacements: Because businesses can join and exit an industry with minimal restrictions, the number of substitutes in the same product line at varying prices offers a danger of alienating investors.
- Frauds: As the digital era has progressed, the number of instances of cybercriminals has increased. Because the firm’s operations are online, there is a greater danger of fraud and investors’ sensitive data theft.