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Weekends would add 40% more trading hours. Would revenue follow?
Robinhood plans to let customers trade a curated list of U.S. stocks and ETFs on weekends, pending regulatory review. can buy and sell many of the most popular stocks and exchange-traded funds from Sunday at 8 p.m. ET until Friday at 8 p.m. ET on the broker's 24 Hour Market.
That adds up to 120 hours a week, and it leaves the weekend as the only time when stocks are off-limits. At its HOOD Summit in Houston on Sept. 29, the firm said it plans to fill the gap by letting customers trade a curated list of U.S. stocks and ETFs around the clock, weekends included. Robinhood expects to launch it early next year, pending regulatory review. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Adding weekends would bring the 24 Hour Market to all 168 hours in a week, or about 40% more time to trade. But I don't think 40% more hours means anywhere near 40% moreRobinhood's equities revenue comes mainly from payment for order flow .
Showing how fast this line is rising, equities revenue almost doubled year over year to $129 million in the second quarter, according to Robinhood's quarterly filing. That was up from $82 million in the first quarter, too. So equities made up around 17% of transaction-based revenue, compared with about 13% three months earlier and 12% a year before. Average stock-trading volume per trader grew 56%, and the number of customers making stock trades climbed 13%.
And Robinhood's take is small. Customers traded a record $956 billion in stock in the quarter, up 85% from a year earlier, so the company earned around $1.35 of equities revenue per $10,000 traded. This growth has slowed a little since then. In August, customers traded 68% more stock by dollar value than a year earlier, according to Robinhood's monthly operating data.
Robinhood doesn't say in its quarterly reports how much of its stock volume already trades in the 24 Hour Market, so any estimate here is rough. At the second quarter's pace, equities revenue comes to around $516 million a year. If weekend hours boosted that by the full 40% the extra time represents, the rise would be about $206 million, or about 4% of Robinhood's yearly revenue pace of $5.2 billion.
I'd say the company probably won't get near that ceiling. Weekend trading will start with a limited list of stocks and ETFs. And some Saturday trades could just be trades a customer would've made on Monday morning anyway, which shifts revenue around instead of adding to it. A 5% to 10% boost to equities revenue would add about $26 million to $52 million a year -- 1% of sales at most.
Sure, weekend hours could also keep active traders on the app on days when stocks have been off-limits, and so could thePerpetual futures, which are leveraged crypto contracts that never expire, are starting to roll out to eligible U.S. customers, with up to 10x leverage on Bitcoin and Ether and 3x on six other coins. Robinhood plans to charge just 0.01% a trade on them through the end of the year.
Over time, they might help a shrinking crypto business, whose second-quarter revenue dropped 38% from a year earlier, to $100 million. Earnings contracts, exchange-listed binary options linked to company-specific performance metrics, are expected to launch in October, pending regulatory approval. Robinhood won't charge contract fees for them through year-end, either. Also starting in October, Robinhood is adding 35% more options trading hours for its most popular symbols.
The same caution about hours applies. But options are Robinhood's largest transaction line, at $342 million last quarter, so the move is arguably the bigger opportunity. Ultimately, weekend trading looks more like a convenience for Robinhood's most active customers than a big new source of revenue.with revenue climbing so fast, some premium makes sense.
But the price already assumes Robinhood keeps adding new ways to make money for years to come, and weekend trading is probably one of the smaller ones.for investors to buy now… and Robinhood Markets wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Stock Advisorand his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a
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