Trading app Robinhood unveils its first billion-dollar share buyback plan – 28/05/2024 at 23:38.

((Automatic translation by Reuters, please see disclaimer

(Added details on credit cards and retirement accounts offered by Robinhood in Sections 6-9)

The Robinhood Markets Trading App

HOOD.O launched its first-ever share buyback plan, saying it would buy back $1 billion worth of shares as it grows beyond its startup phase.

Best known for being the go-to app for retailers, the company has launched a number of new features to meet customer demand for sophisticated products.

The purchase highlights that Robinhood is taking a similar approach to woo investors who may be looking for signs of maturity before backing the 11-year-old company. Buyouts are usually associated with legacy companies.

The buybacks will be completed over a period of two to three years, starting in the third quarter, Robinhood said. Shares rose 4.3% to $21.34 after hours and are expected to open at their highest level since December 2021 if current gains continue.

Companies often buy back their shares when they believe they are undervalued. Robinhood shares were up nearly 61% year-to-date through Tuesday’s close, but were still 58% below the peak they hit in August 2021.

Since then, the company has expanded its range. Earlier this month, it said more than 1 million customers had signed up to the waiting list for a credit card it launched for its premium Gold subscribers in March.

It also set up a retirement account in late 2022 and is expected to launch index futures and options trading later this year.

Its core business, trading, has also seen a rebound in recent quarters as hopes of a soft landing in the US economy prompt clients to dive back into risky assets such as stocks and cryptocurrencies.

The company’s profits have exceeded market expectations for eight consecutive quarters, according to LSEG data.

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