Anindita Nayak
Bhubaneswar, 29 May 29
Trading app, Robinhood Markets launched its maiden share buyback initiative as part of which it plans to repurchase $1 billion worth of stocks from investors.
The company, famous among individual traders, has been introducing several new features to meet the demand for advanced products from its customers. The decision to initiate a buyback indicates that Robinhood is following a strategy similar to established companies for attracting investors.
Normally, buybacks are associated with older firms, who try to reward their investors for staying put in the company for long years.
Robinhood announced that the repurchases would occur over two to three years, beginning in the third quarter. After the announcement, the shares of rose by 4.3% to $21.34, which would mark their highest opening since December 2021 if the current gains persist.
Companies often buy back their own stock when they believe it’s undervalued. Although Robinhood’s shares have increased by almost 61% this year until Tuesday’s closing, they are still 58% lower than their peak in August 2021.
Since then, the company has expanded its services. Just this month, it announced that over 1 million customers have joined the waitlist for a credit card launched in March for its premium Gold subscribers. Additionally, it introduced a retirement account towards the end of 2022 and plans to introduce trading in futures and index options later this year.
The company’s main business of trading has also bounced back in recent quarters, as optimism about a smooth transition for the US economy encourages customers to invest in risky assets such as stocks and cryptocurrencies.
