the biggest shock to the US economy in living memory.

- [Alexander] 2020 has been a turbulent year

for the stock market.

- The biggest drop we've seen since that crash in 1987.

- Fourth quarter, 1999.

That's the last time that we saw a quarter this good.

- [Alexander] But rather than be sacred off

by the Dow's wild ride,

millions of new investors,

many of whom are bored, isolated and out of work

because of the pandemic are buying like never before.

2020 has been a better year for all brokerage firms

but the broker of the moment is Robinhood.

Named after the fictional character

who robbed the rich to feed the poor,

Robinhood's founders say they create the platform

to democratize America's financial system

by making it cheaper and easier

for a new generation of investors

to begin building their wealth in the stock market.

- [Narrator] I bet he's investing right now.

He's taking charge, he's grabbing the bull by the horns.

- [Alexander] Since it was founded in 2013,

the Silicon Valley-based firm has tried

to disrupt the industry.

On Robinhood, traders can buy small slices of a stock,

otherwise known as a fractional share.

Robinhood also doesn't require a minimum balance

for opening an account.

But the perk that the company is most known for

is free trades.

- You ever think about trading stocks?

There's always been a cost.

Usually up to 10 bucks for every single trade.

Until now.

- [Alexander] Today, free trades are the industry standard

but that wasn't the case until last year

when Robinhood's success

spurred established industry brokers,

including Charles Schwab, E*Trade and TD Ameritrade

to eliminate their commissions.

Free trades were partially what attracted Will Nelson

to the app but what really sucked him in

was the intuitive interface.

- It was fairly easy from the get go.

- [Alexander] Nelson, who has no background in finance,

started using Robinhood in 2018.

- Go into the search bar,

you type in what you want, there it is.

There's the Buy button.

How many did you want?

It's fairly straightforward.

- [Alexander] That recipe of easy-to-use interface

and free trades has transformed Robinhood

into something of a phenomenon.

This year, the company reported three million new accounts,

bringing its total to 13 million.

All of this attention has made Robinhood one

of the most valuable startups in the country

but it has also drawn criticism.

- I fundamentally believe that decisions belong

to their owners so long as those decisions

were entered into knowingly and willingly.

- [Alexander] Tara Falcone is a personal financial adviser

whose company ResiUP specializes

in working with Millennials.

- And I think that that's where the fine line

is really being drawn here

is that these young, inexperienced traders

don't know what they're doing.

They've never received education around investing.

Most of them have no idea what a stock even is

or what its price represents.

- [Alexander] In a statement to The Wall Street Journal,

a Robinhood spokesperson wrote,

"It's not lost upon us

that our company and our service have become synonymous

with retail investing in America,

and that this has led to millions

of new investors making

their first investments through Robinhood.

We recognize this profound responsibility,

and we don't take it lightly."

In June, a 20-year-old trader died by suicide

after he misinterpreted his Robinhood account statement,

which temporarily showed a negative balance

of about $730,000.

His family said he was trading options,

a complicated financial instrument typically used

by experienced traders.

- I likened it like to giving the keys

of a sports car to a 12-year-old

because there are certain aspects

or actions in our society that are gated by age

because of where we are as young people

in our fundamental psychological development.

- [Alexander] In a final note left for his family,

which was later tweeted by his relative,

Kearns wrote that he had no clue what he was doing

and that he never intended to take this much risk.

In a blog post on Robinhood's website,

the company's co-founders wrote

that they were personally devastated by this tragedy.

Robinhood said it now provides investors

with more educational resources and customer support.

But critics say Robinhood still makes it too easy

for inexperienced individuals to trade.

Robinhood still has fewer hurdles for options trading

than other brokers.

- So I'm gonna open up the Robinhood app.

I'm going to hit the magnifying glass

at the bottom.

It takes me to browse.

I'm gonna type in the ticker symbol.

- [Alexander] Nelson has been trading options

on Robinhood for about a year now.

- And the next thing I wanna do

is I wanna hit Trade.

I see an option to buy or trade options.

I'm gonna click Trade Options.

It pulls it up.

- [Alexander] In just a few minutes

with just a few clicks, he makes his trade.

- Hit Review, it gives you a chance

to make any edits before you execute.

Swipe up to submit.

And the order was filled.

So it really is that simple

to execute an options trade on Robinhood.

- [Alexander] To learn more about the world of finance,

Robinhood traders often turn to social media.

Nelson taught himself about options,

partially by watching YouTube tutorials.

Others turn to popular forums on Reddit or Facebook.

- I think what's happening in the options realm right now

with young people is that it's talked up

so much more on social media

as this get rich quick scheme.

- [Alexander] Jose Duenas is a moderator

on the Facebook group, Robinhood Stock Traders,

which has over 100,000 members.

- So I joined and then I immediately saw things

that were kind of worrying.

People just throwing money into a stock.

- [Alexander] Duenas, who is a self-taught trader,

felt an obligation to try and help.

- You feel like, or at least I felt

that I had some type of responsibility towards these people.

I'm like okay, maybe I know a little bit more

than the average person.

Let me try to educate some of these people.

- [Alexander] Earlier this year,

Hertz filed for bankruptcy

and its stock price crashed.

Whereas established traders stayed away,

Robinhood's traders invested in record numbers.

- So a stock that had over the last year

or so really traded kind of in the teens,

they're now seeing it in the $1 and change range

and thinking oh my God,

this is the steal of the century.

Of course, Hertz is gonna continue to exist in some form.

I better own this.

- [Alexander] This strategy has been repeated many times

with Robinhood traders jumping on high-risk investments

like the airlines and Kodak.

Robinhood's app has also been described as gamified.

- Robinhood has different levels that you can unlock

as you start trading.

Level one is usually just buying and selling stocks.

And then level two I believe is options trading.

Option three is a more advanced method they say

but they do make it seem like you unlock more,

the more you learn.

So it is kind of a video game aspect.

- I've never seen another brokerage account

as colorful and as exciting as the Robinhood trading app.

There's confetti that appears the first time

you place a trade.

And while that is something to celebrate,

I think that confetti denotes a bit more

of a idea of celebration than maybe is warranted.

- [Alexander] Despite the potential pitfalls,

both Nelson and Duenas say they'll continue

to use the app.

- I kind of do see it as a stepping stone,

I'm young, I'm 24 years old.

I think it is a good platform to get your feet wet,

maybe learn a little something about stocks

but for serious investing,

I don't think Robinhood is considered

or should be considered a serious stock broker.

- And I think there is value

into making accessible platforms

for people who don't have $20,000

or hundreds of thousand of dollars

or millions of dollars to go to a hedge fund

or to get a special broker

and to have these fees.

I think it's very important

to kind of increase access to it

because that's part of the long-term way we,

I don't know, make society more equitable.

(dramatic music)