The great retail trading boom of 2021 is turning to bust. That is the view of Robinhood, the company whose commission-free trading app helped turn millions of people into first-time investors. But it is not the full story.

Robinhood’s funded accounts grew by 100,000 to 22.8mn in the three months to the end of March, an increase of just 0.4 per cent. More worryingly, fewer customers are actively trading. The number of monthly active users fell 8 per cent from the fourth quarter.

In all, Robinhood took in 43 per cent less in revenue during the first three months of the year and racked up nearly $400mn of losses. It has announced plans to lay off about 9 per cent of its staff. This has knocked its share price down 85 per cent from its August peak.

Robinhood said market uncertainty has made customers more cautious. But growth at rival brokerages tells a different story. Two years after storming the markets retail investors are still around, just trading with rivals.

At Charles Schwab, the US’s largest retail brokerage, 1.2mn new brokerage accounts were opened during the first quarter. The number of active brokerage accounts also rose sequentially — by 1 per cent — to 33.6mn. Indeed, Schwab claims volatility drove strong customer engagement. They averaged 6.5mn trades a day, a level exceeded only by last year’s reopening surge. Fidelity too reported a 3 per cent increase in its retail brokerage accounts to 33.5mn.

Unlike its rivals, which use zero-commission trading to lure in new customers and sell them other services, Robinhood gets most of its revenue by routing customers’ stock trades to high-speed trading firms.

The contentious practice, known as payment for order flow, took a hit as investors pulled back from trading equities, options and cryptocurrencies on its platform. Robinhood, having pioneered no-fee trading, desperately needs to find a way to monetise those that are still on its platform. Otherwise, it will have a no-revenue business.