PSA: Current Freetrade crowdfunding share prices including this round. I got in at R3 but imagine if you got in during R1.
R6 May 2020 251p
R5 July 2019 96p
R4 April 2019: 84p
R3 June 2018: 52p
R2 March 2017: 15p
R1 July 2016: 8p
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In the medium term, yes, but in the long term they are aiming for it to be self-sustaining with a freemium model just like Freetrade. Therefore, the Invest and ISA arm of Trading212 will be no less âshadyâ than Freetrade; personally, using both platforms Iâve never been nudged towards CFDs and, had I not known prior they dealt with CFDs, Iâd be non-the-wiser from my experience with the Invest account alone. I say this as an R3 to R6 Freetrade investor myself, and Iâd be much more comfortable with my investment if Trading212 was objectively acknowledged rather than defensively dismissed by the crowd/management.
I agree, I do think itâs dangerous to dismiss your competition outright and so quickly, and thereâs a lot of parroted opinion thatâs presented as fact, which does somewhat cloud the debate.
The key difference is that T212 started out on the basis of being a CFD provider, and is now pivoting away from this model towards more vanilla brokerage activity. Arguably, this makes good business sense, as the tide is turning against CFD/spread betting providers as regulators are paying a lot more attention to the derivatives and betting products aimed at retail investors. CFDs are not inherently bad or evil, and serve a purpose, just not to retail investors. Itâs worth considering that theyâve had a decent head start over Freetrade, given they started life in 2013. This means theyâve been able to build a beefier product and acquire more customers - but are they actually better? Iâm not so sure.
Freetrade did not start out on this basis, and only really launched their beta product 18 months or so ago. I would say they are a true challenger in that they started out with the aim of wanting to democratise access to capital markets to typically younger regular retail investors who have been previously dissuaded or locked out from participating, either through high costs or perceived complexity. I think that vision really does set them apart, and it was partly on that basis that I have invested in them. As such, unlike T212 theyâve not had the luxury of being able skim off ridiculous profits from clients, knowing full well that majority will lose money. The house always wins. Again, this is a key point of difference for me. But are Freetrade perfect? Of course not, theyâre in start up mode, in a highly competitive market, with a lot of noise and competing views. But do I think theyâve got legs? Absolutely.
The FT has an informative piece on commission free brokerage, free to read, below. Incidentally, thereâs a curious incident by where the FT had uncovered that one of the principals at T212 had been posting and probably shilling to the Freetrade community.
ÂŁ3 per month Isa, spread, fx, interest, premium services
Yep, except thereâs definitely no spread, itâs not legal as Freetrade is a UK broker. Itâs mentioned frequently by Adam on the forums and at the AMAâs
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The FX fees cover cost. Itâs not a profit making fee. Spread is absolutely not something FT does.
Itâs part of the business model as a source of revenue (always has been). With Invest by Freetrade platform, they make money on the +0.45% FX fee but just wonât disclose how much of it contributes to revenue.
Thatâs not my understanding of it at all. Iâm pretty sure it just covers cost. Can you show me otherwise? Happy to be corrected if Iâm wrong.
Sorry to break it to you, but your understanding is wrong.
Have you even checked the deck? Or prior decks even? FX is part of the business model; you donât list costs under the revenue business model, make no mistake FX is a revenue driver. Ask Adam.
Had a look on the Freetrade forum, where it says:
- the FX fee is to cover costs
- the fee may be revised when the new platform is rolled out
Latter has now happened, so maybe the fee will drop in future. Or it might be that given the difficult circumstances, plans have changed and the fee will remain as it is to cover costs/losses elsewhere.
Which could be why thereâs an understanding gap, that the situation has been fluid. I think it would be fair to say that even if Freetrade are making a profit on FX, its not going to be a huge profit, and itâs not going to be actual profit once costs elsewhere are considered.
I donât have the deck to hand right now but Iâll look at that later, see if anything is materially different or directly contradicting what I found on the forum.
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Nowhere in the deck does it say they make money on FX fees. I never said they didnât count it as revenue. But it just covers cost. Itâs not a profit generating fee.
It is in the crowdcube deck
Sorry, not sorry, for quoting you again but they just pulled the rabbit out the hat (& fired a few shots) with a self-sustainability update:
Congrats on Freetrade reaching ÂŁ7m 
in 3 working days:
âsubscription model doesnât workâ
Tell that to Amazon Prime
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Or Barclays, Lloyds Bank, Natwest et al, who all sell profitable package accounts.
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Youâre both @danbeddows misinterpreting what he said: he said it doesnât work in fintech! Itâs obtuse to pervert his words.
Other than Revolut and Monese, nobody has really fully cracked it yet as a reliably profitable business model.
Claiming subscription modelâs donât work for just fintechâs is a bit of a sweeping statement to make, and a stupid one, really. Fintech isnât a business model, market or industry. Banking is, though, and it works fine for them.
He says the model doesnât work. Youâve also just listed two fintechs it does work for?
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I listed 2 that itâs debatable/arguable it works for as neither of them are profitable, but could be in future.
A âstupid sweeping statementâ would be to say âsubscriptions donât workâ just as you misinterpreted. The last time I checked, fintech was a fusion of finance and technology, thus a subset, âbusiness model, market or nascent industry in of itself.â But hey, disregard his observations all you want but at the moment it bares a lot of truth, just look at Monzo Plus.