At its peak in August 2021, Robinhood shares topped $70 apiece. Nearly 90 per cent of that value has vanished. The meme stock frenzy expressed through Robinhood’s trading app is a distant memory. In a bid to reboot that lost buzz, the US low-cost brokerage is offering users all-hours stock trading.
Robinhood has started with a select basket of popular stocks and exchange traded funds. Starting this week, some users will be able to trade between 8pm Eastern Time on Sunday and 8pm on Friday. The service will be available to everyone in June.
Robinhood’s rivals will ask “so what?” Investors who want to trade outside standard hours can already to do so. Brokering platforms such as Interactive Brokers, E*Trade and TD Ameritrade all allow overnight trading for some stocks and ETFs.
The new service will at best simplify the process. It will do nothing to support Robinhood’s beleaguered share price or reduce widening losses.
The young investors that fuelled Robinhood’s meteoric rise are not trading so much these days. Monthly active users on the platform totalled just 11.8mn during the first quarter. That is down from the 15.9mn a year ago and is about 45 per cent less than 21.3mn at the height of the trading frenzy.
Robinhood’s main revenues come from the controversial practice of selling customer trades to other brokers to execute. This has shrivelled. Revenues from this channel totalled just $207mn in the first quarter compared to $218mn a year ago and $420mn in 2021. Robinhood now makes more from customers’ idle cash, with revenue from net interest income up 278 per cent to $208mn.
These gains are unsustainable. The US Federal Reserve is expected to pause rate hikes this year and may lower them afterwards. Robinhood needs investors inspired by Reddit’s WallStreetBets thread — or their successors — to give it a lift.
Round-the-clock trading — which offers less liquidity and greater price volatility — will not tempt back the day traders. Only a sharply rising market can do that.
