Robinhood looks for new revenue stream as shares fall under $10

Jan. 28, 2022 5:29 AM ETRobinhood Markets, Inc. (HOOD)SCHW, MS, NDAQ, ICE, IBKR, SQBy: Yoel Minkoff, SA News Editor18 Comments

Stock Trading Platform Robinhood Goes Public On The New York Stock Exchange

Spencer Platt/Getty Images News

The latest results from Robinhood (NASDAQ:HOOD) have failed to impress investors, with the stock plunging over 14% premarket to under $10, following a 6% fall during the regular session on Thursday. The retail brokerage posted weak revenue guidance, as well as big earnings and revenue misses in Q4, as the retail trading frenzy in meme stocks and crypto lost steam. See Robinhood's stock-crushing Q4 results in six charts.

That's prompting the industry pioneer, which brought commission-free trading to the masses (via payment-for-order-flow), to look for new revenue streams. Quote: "We're close to delivering a feature that our customers have been asking for an even larger window of available trading hours," CEO Vlad Tenev said on an earnings call. "We call this feature hyper-extended hours and anticipate rolling it out later this quarter."

Currently, Robinhood only allows premarket/extended trading 30 minutes before the stock market opens at 9:30 a.m. and for two hours after the close at 4 p.m. Other electronic brokers offer more extended access, allowing trades as early as 4 a.m. and as late as 8 p.m. Liquidity is relatively thin at those times, which could lead to major price swings, though the increased risk is sometimes tolerated by regular traders, like during earnings season when reports are released outside of scheduled trading hours. 2021 was the year options took over traditional stock trading.

Why not 24/7? Crypto trades around the clock, and futures almost do as well. But when it comes to the U.S. stock market, many feel that better price discovery happens when most Americans are awake. For many market makers, exchanges, brokers, investment houses and even financial professionals, a shift to 24/7 trading would also make their lives more complicated, and in many ways they dictate the resources in the current trading environment.

However, hedge-fund billionaire Steve Cohen is trying to change that by seeking approval from the SEC for first U.S. stock exchange that would operate around the clock, including holidays and weekends. His startup, called the 24 Exchange, has the potential to shake up market dynamics and many like the New York Stock Exchange (NYSE:ICE) and Nasdaq (NASDAQ:NDAQ) are watching.

See also Wall Street looks to shift securities settlement cycle to T+1.

Related brokers: Robinhood (HOOD), TD Ameritrade (NYSE:SCHW), Interactive Brokers (NASDAQ:IBKR), Charles Schwab (SCHW), E-Trade (NYSE:MS) and Cash App (NYSE:SQ).

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