Robinhood’s stock pops 25% on news of extended trading hours

Robinhood, the popular investing app for consumers, announced on Tuesday it would extend its stock trading hours in the morning and in the evening as it works toward its goal of 24/7 investing. Previously, the app offered trading from 9 AM ET to 6 PM ET — 30 minutes before the market opened and two hours after its close. The app’s new trading hours are now 7 AM ET to 8 PM ET.

Investors have responded favorably to the news, with Robinhood’s own stock up more than 25% following its announcement.

The fintech company explained the reasoning for the extension in a blog post, saying the additional trading hours would better meet the needs of its customers.

“Our customers often tell us they’re working or preoccupied during regular market hours, limiting their ability to invest on their own schedule or evaluate and react to important market news,” the company wrote. It also noted there were a number of Robinhood customers who exclusively logged onto the app outside of normal market hours, both in the AM and PM. “They’re juggling a lot, from full-time jobs to school, families and side gigs,” Robinhood said. “Our new extended trading hours for equities will give them more opportunities to manage their portfolio at a convenient time for them, whether that’s in the early morning or in the evening.”

The update is one of several the company has made since its founding to serve the needs of consumer investors beyond the app’s core value proposition of commission-free stock trading.

In recent years, Robinhood has expanded into crypto, introduced fractional shares, added automatic investments and rolled out 24/7 customer support.

Just this month, Robinhood also launched its own Cash Card, which allows customers to access their spending cash on the go and optionally round up purchases to the nearest dollar and then invest the extra into their choice of assets. The broader service competes with other fintechs with features like early access to direct deposit paychecks as well as no traditional banking service fees, subscription fees, ATM fees or overdraft fees. The company said the card would also build on its mission of democratizing finance.

Robinhood has seen a sizable number of consumers adopt its app since launch, ending last year with 22.7 million accounts, up 81% from the 12.5 million in December 2020, thanks to its ability to woo new and often younger investors to the stock-trading market for the first time.

But Robinhood has seen slowing growth in recent quarters, which has sent its stock tumbling. The company in Q4 2021 reported revenue was up 14% from the year-ago quarter, or less than half the growth rate from the summer months. It also issued a weaker revenue forecast for the current quarter and missed Wall Street’s Q4 expectations, with $362.7 million in revenue, versus the $376.3 million expected, and a loss of 49 cents per share versus the 35 cents expected loss.

The stock in 2022 had declined by 70% from its IPO price, and 87% from its high in August.

The additional trading hours could potentially help Robinhood regain growth if its thesis is correct that its customers want more opportunities to trade outside regular market hours. Of course, Robinhood also warned of risks in extended-hours trading, but noted the additional hours would give customers the ability to trade based on quarterly earnings announcements made after the market closes, as well as based on activity taking place in foreign markets.

The new trading hours will make Robinhood more competitive with traditional brokerages, like Charles Schwab and Fidelity, for example, which already offer extended trading.