Robinhood stock trader revolt boosted Webull, China's alternative brokerage app

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Reddit-based retail investors wreaked havoc on financial markets last week, squeezing major U.S. hedge funds by buying up shares of heavily shorted stocks like GameStop and AMC. Amid the madness, retail investors also turned to China’s Webull, a retail trading app similar to Robinhood that saw a sudden surge in downloads.

Before last week, Webull had never appeared in the top 100 downloaded apps on Apple’s U.S. app store. But last Thursday through Saturday, it ranked No. 2 behind Robinhood, according to mobile app research firm Sensor Tower. On Thursday alone, Webull was downloaded an estimated 100,000 times across Apple and Google Play stores, and Webull acknowledged last week that downloads were up 1,548% compared with the usual seven-day average.

At least some of that growth was tied to backlash against Robinhood for its decision to halt some trading amid the GameStop frenzy. Investors identified Webull as a clear alternative, but users who jumped ship soon realized that Webull was susceptible to some of the same forces that had ensnarled its rival.

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Webull was founded in 2017 by Wang Anquan, a Chinese executive who had worked at e-commerce giant Alibaba and smartphone maker Xiaomi. Webull is headquartered in New York but is owned by Fumi Technology, a Chinese holding company that has received backing from Xiaomi and other private equity investors in China. Wang owns a 35% stake in Webull’s parent, Fumi Technology, according to Bloomberg.

With Webull, Wang wanted to make trading simple and easy for individual investors while offering some advanced tools like analyst ratings and technical indicators for analyzing stocks. As a zero-commission brokerage, Webull makes money through paid subscriptions to global market data and by collecting fees on certain investments like short bets and margin trades.

The comparisons to Robinhood are unavoidable, though Webull CEO Anthony Denier said in late 2020 that his company was not trying to “oversimplify” and “gamify” the investing experience, two criticisms Robinhood often faces.

Until last week, Denier had characterized Webull as a sort of bit player in a crowded online brokerage scene.

“We’re in a really competitive space,” Denier told the Australian Financial Review in December 2020. “Sometimes it’s better to not wake up the giants.”

Even as it tried to keep a low profile, Webull built up a user base of 2 million retail investors as of last year. Robinhood’s 13 million users still dwarf Webull’s following, but Webull may have peeled off some Robinhood users amid last week’s investing craze.

Last Friday, with GameStop and AMC stocks trading at all-time highs, Robinhood blocked trades of those stocks on its platform, prompting backlash from the Reddit community as well as politicians like Rep. Alexandria Ocasio-Cortez, who argued that it was “unacceptable” for hedge funds to freely trade stocks while platforms hamstrung retail investors.

Robinhood’s trading stoppage, at least momentarily, appeared to send a wave of new users to Webull. “Everyone should try to sign up for a Webull account,” one Reddit user wrote last Friday.

But users on Webull quickly discovered that Webull had also blocked trading for stocks like GameStop and AMC at roughly the same time as Robinhood. Webull resumed trading for GameStop and AMC just hours later; Robinhood waited until the next day.

Webull CEO Denier on Friday explained why his company halted trading while signaling support for retail investors.

“It was not our call” to halt trading on GameStop, Denier told Bloomberg TV on Friday, explaining that Webull’s clearing platform made it impossible for Webull to execute the trades. “We’re part of this revolution that’s going on.”