Some customers are wary about lower liquidity and high volatility in extended hours
Robinhood Markets Inc (NASDAQ: HOOD) on Tuesday said the brokerage platform is launching extended trading hours for its customers as the company is working to introduce 24-hour equities investing.
Shares of Robinhood jumped as much as 24% to $15.91 post announcement.
Trading will run from 7 a.m. to 8 p.m. New York tim, extending the trading day for customers by four hours.
“Our customers often tell us they’re working or preoccupied during regular market hours, limiting their ability to invest on their own schedule or evaluate and react to important market news,” Robinhood said in the blog post.
Traditional market hours in the U.S. run from 9:30 a.m. to 4 p.m., and the California-based brokerage firm already offered extended trading from 9 a.m. to 6 p.m.
However, some of its customers are wary of the change as both the premarket and aftermarket trading hours come with risks, including lower opportunities to buy and sell equities and a potential for higher volatility. Both the scenarios could lead to retail investors getting a worse price than trading in the market hours.
Robinhood, which is heavily reliant on trading, is seeking ways to expand its business.
Although the company has recently jumped into cash cards and crypto wallets, nearly three-quarters of its revenue comes from transactions.
In January, Robinhood said it expects its first-quarter net revenue to be less than $340 million, a 35% decline from the same period last year.
However, last year the company cashed in the volatility, which spiked as the retail investors bid up the meme stocks prices, including GameStop Corp (NYSE: GME).
Picture Credit: FT