Robinhood Markets Inc HOOD is aggressively expanding its product suite for active traders, with plans to launch index options in the fourth quarter of 2024 and futures trading, as it looks to capitalize on its growing user base and trading volumes.
What Happened: During the company’s first quarter of 2024 earnings call, CEO Vlad Tenev announced the upcoming rollouts, stating “We have announced that we are going to be launching index options…index options are coming in fourth quarter. We’ll also be launching Futures as we’ve mentioned in the past.”
The move to offer index options and futures represents a direct appeal to Robinhood’s core base of active retail traders. Index options, which allow trading on indexes like the S&P 500 rather than individual stocks, have grown in popularity due to their around-the-clock trading hours.
“We should note index options trade round the clock, which is one of the reasons why they become so popular,” Tenev noted on the earnings call. “So, we don’t anticipate seeing a ton of cannibalization there.”
Robinhood is aiming to stand out versus incumbent brokers with its new active trader offerings through best-in-class user experience tailored for mobile, as well as aggressive pricing.
“As with any new Robinhood product, there’s two areas where we’d like to stand out – user experience and economics,” Tenev said. “We want to make sure our tools are easy for active traders to use, particularly on mobile…And then economics, we intend to make very, very competitive, but also profitable.”
CFO Jason Warnick added that pricing details are still being finalized but reiterated “we want it to be a great value for customers and also make a lot of sense for us economically.”
The expansion into index options and futures comes on the heels of a blowout first quarter for Robinhood, with record revenues, net income, customer assets and trading volumes across equities, options and crypto. Attracting more active traders is seen as key to Robinhood’s future growth.
“We are focused on winning the active trader market,” Tenev stated. The company’s initiatives like its 24-hour trading platform, new web offering for advanced traders, and now index options and futures, appear squarely targeted at making Robinhood the venue of choice for retail active traders.
Why It Matters: This announcement comes on the heels of Robinhood’s first quarter of 2024 earnings report, which showed a record revenue of $618 million, a 40% increase year-over-year. The addition of index options and futures trading is likely to further attract active traders to the platform.
Despite this positive development, Robinhood has been facing challenges, including SEC allegations of crypto violations. The company’s stock has been performing well, with shares up as the market shrugs off these concerns.
Earlier in April, there were rumors that Robinhood had halted its 24-hour trading, sparking concerns among investors. This latest announcement of new trading options could help the company regain investor confidence.
HOOD Price Action: Robinhood shares are up 4.20% to $18.60 in after-hours trading Wednesday versus a 52-week trading range of $7.91 to $20.55.
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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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