Robinhood to introduce 24-hour stock and ETF trading

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Online broker Robinhood is set to allow its clients to trade a range of ETFs and stocks around the clock, with the introduction of 24-hour trading at the firm.

The new service will be introduced later in May and will make Robinhood the first US broker to offer this facility.

24-hour trading

Twenty-four-hour trading will be rolled out in a limited capacity next week, with popular stocks such as Apple and Tesla among the instruments being made available.

Some brokers such as Robinhood rivals E-trade and TD Ameritrade already allow their clients to trade 75, or more, select stocks and ETFs until 03.30 am Eastern time.

However, the new initiative from Robinhood will take this a stage further.

Money never sleeps

The new service is aimed at younger investors many of whom are used to being able to trade in cryptocurrencies and other digital assets 24/7.

Robinhood will use a simplified trading interface to appeal directly to this demographic and hopes that will attract traders to the brand.

In the past Robinhood has been criticised for its gamification of trading, and for allowing inexperienced traders to access riskier products, such as options, which they may not fully understand.

Robinhood rose to prominence and grew its business dramatically during the meme stock mania seen in early 2021.

It subsequently became involved in the controversy about the practise of payment for order flow or PFOF.

Under PFOF market makers and high-frequency traders pay brokers to route retail clients’ orders through their systems. Something that many observers believe creates a conflict of interest and may even disadvantage the end client.

A loss-making brokerage

Robinhood also announced its Q1 2023 earnings this week which showed that it generated $441.0 million in revenue up by 616.0% and a loss of $511 million or 57 cents per share in earnings.

Net interest revenue rose by 25% to $208 million as base rates in the US continued to rise.

However, despite that the firm’s first-quarter loss was some $345 million, or -38 cents per share greater than that seen in the prior quarter.

Robinhood also announced that it intends to launch a UK operation by the end of 2023. Shares in the broker rose by more than +6.0% following these announcements.

The introduction of 24-hour stock and ETF trading is a nice marketing gimmick for Robinhood to push but it’s questionable as to whether trading out of hours, with limited liquidity and fewer market participants is actually beneficial to retail traders.

Robinhood’s average revenue per user rose to $77 in Q1 2023, but that is still a very small margin for a business that’s burning through cash.

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