Freetrade, the UK’s answer to Robinhood, reaches break-even

British stock trading app Freetrade hit a breakeven point earlier this year, the company told CNBC, marking its first ever move into the black after posting a full-year loss in 2023.

Freetrade reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of £100,000 ($124,863) in the first quarter of 2024, according to unaudited financial statements shared with CNBC.

Preliminary sales for the quarter were £6.7m.

Freetrade still generated a loss of £8.3m in 2023, compared to the £28.8m loss the year before. Turnover rose to £21.6 million last year, a 45% increase from 2022.

“We have defied difficult market conditions and delivered healthy growth in 2023, while dramatically reducing losses” in 2022, said Adam Dodds, CEO and founder of Freetrade.

The development will be welcome news for Freetrade’s crowdfunding investors, who are looking for an update on the company’s trajectory towards profitability after a difficult financial period.

Freetrade saw its valuation cut by 65% ​​to £225 million ($280.3 million) from £650 million in 2023 in the latest equity crowdfunding round on Crowdcube, with the company blaming a “different market environment” plagued by higher interest rates and inflation . .

Net inflows also reached £130 million in the first quarter, as retail investor activity grew in response to last year’s rebounding markets. Assets under management also stood at £1.8 billion.

“Importantly for our crowdfunding investors, we have set out a clear path to break-even during our last fundraising event,” said Dodds.

“As we look ahead to the remainder of 2024, we have significant product developments that will support our next phase of growth as we prepare to roll out our web platform.”

Stock markets suffered severe declines in 2022 due to macroeconomic uncertainty and higher interest rates fueled by Ukraine’s full-fledged invasion of Ukraine, leading to risky trading around the world.

Freetrade is a competitor of Robinhood, the American stock trading platform. Robinhood recently relaunched in Britain in March, in its third attempt to crack the European market.

Freetrade’s Dodds said he is undeterred by Robinhood’s return to Britain, telling CNBC via email that “more choice and competition is good for retail customers.”

“Ultimately there will be multiple winners in the UK market, offering the full range of tax packaging and features expected by the local private investor,” he added.

Freetrade said its first quarter performance was due to higher trading volumes and higher foreign exchange earnings.

Since October 2023, Freetrade said it has seen a marked increase in retail investor participation amid speculation about when and how often the US Federal Reserve and other central banks will cut interest rates this year.

A rally in crypto prices also helped Freetrade in the first quarter. Although the platform does not offer crypto trading, Freetrade experienced increased activity from retail investors in crypto-correlated stocks such as Coin base, MicroStrategyAnd Marathon digital.