How does Webull make money?

Webull primarily makes money through several diversified revenue streams, including Payment for Order Flow (PFOF), interest earned on uninvested cash and margin loans, and fees from its stock loan program for short sellers.

Webull, like many commission-free trading platforms, generates income even without charging per-trade commissions. Here's a breakdown of its main revenue sources:

How Webull Generates Revenue

Webull employs a multi-faceted approach to profitability, ensuring a robust business model that supports its low-cost trading services.

1. Payment for Order Flow (PFOF)

One of Webull's most significant revenue streams is Payment for Order Flow (PFOF). When you place a trade on Webull, your order isn't executed directly on an exchange. Instead, Webull routes these orders to high-frequency trading firms (market makers) who pay Webull for the right to execute your trade.

• How it works: Market makers pay Webull a small fee for routing orders to them. They then profit from the tiny difference between the bid and ask prices (the "spread"). While this practice is common among commission-free brokers, it's a point of debate regarding best execution for investors.

2. Interest on Uninvested Cash

Webull earns interest on the uninvested cash balances held in customer accounts. Similar to a bank, Webull aggregates these funds and invests them in secure, interest-bearing instruments. The interest earned from these investments contributes to Webull's overall revenue.

3. Margin Lending Interest

Webull allows eligible users to trade on margin, meaning they can borrow money from Webull to purchase securities. Webull charges interest on these borrowed funds, which is a significant source of income, especially for active traders who utilize leverage.

• Example: If a user borrows $10,000 from Webull to trade on margin at an annual interest rate of 8%, Webull earns $800 in interest per year from that specific loan.

4. Stock Loan Program (Short Selling)

Webull facilitates a practice known as stock loaning, where it earns money by lending out shares held in investors' accounts. This often occurs when investors engage in short selling.

• Mechanism: When an investor wants to short sell a stock, they borrow shares with the expectation that the stock's price will drop. They then sell these borrowed shares to a third-party investor. If the price falls, they buy the shares back at a lower price to return them to the lender, profiting from the difference.
• Webull's Role: Webull earns revenue by loaning out shares from its users' accounts to these short sellers. Webull charges a fee or a portion of the interest earned on these loaned shares, providing a steady income stream from this activity.

5. Premium Services and Subscriptions

While basic trading is free, Webull offers various premium services and subscriptions that users can opt into for enhanced features. These can include:

• Advanced real-time market data: More detailed and faster data feeds than standard free access.
• In-depth research reports: Access to professional analysis and insights.
• Tools and indicators: Specialized charting tools, screening capabilities, or technical indicators.

6. Cryptocurrency Trading Fees

Webull also supports cryptocurrency trading, and while it might offer commission-free crypto trades, it often generates revenue through a small spread on crypto prices or by charging a fee on crypto transactions.

Summary of Webull's Revenue Streams

By diversifying its income sources, Webull can offer commission-free stock, ETF, and options trading while maintaining a profitable business.