Robinhood Markets Inc. will no longer provide data that shows which stocks are popular among its users.
The decision comes as the Menlo Park, Calif.-based trading app developer wants to shed the perception that its service is mostly used by day traders.
“At Robinhood we’re committed to enabling people to participate in the markets through responsible investing,” a company spokesperson said in a statement. “Moving forward, our web platform will not display the number of customers who hold a particular stock on Robinhood. In the near future, we’ll also limit the use of our API.”
The company said the way the data is sometimes reported by third parties “could be misconstrued or misunderstood” and does not represent the company’s user base.
API allows third-party websites to track how many people are buying or selling a certain stock. The data is often used by hedge funds and other investment firms to try and identify trends among retail investors, who are often considered “dumb money.”
The spokesperson said the vast majority of Robinhood users are “buy and hold” investors who over the long run typically buy more stocks than they sell once they become familiar with the app. Users oftentimes are less likely to buy a stock that is trading at a new high and “look for buying opportunities.”
Not all of Robinhood's tools and resources are going away. Users will still have access to watchlists, analyst ratings, stats, news and educational resources, the spokesperson said.
CNBC first reported Robinhood would stop providing the data.
A regulatory filing released in July said Robinhood earned $180 million, double a year ago, through “payment for order flow,” which is earned by sending customers’ orders to other firms to be executed. Retail trading has experienced a revival this year as a number of online brokers joined Robinhood in offering commission-free trades and people have had more time to monitor their investments while staying at home during the COVID-19 pandemic.
Robinhood last month raised $320 million at an $8.6 billion valuation, bringing its total haul for the funding round to $600 million.
There has been speculation Robinhood could launch an initial public offering in 2020, but some believe a stock-market debut could be pushed back until 2021 because of the uncertainty caused this year by COVID-19.