Robinhood: Round-the-clock trading cannot guarantee an extraordinary recovery

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At its peak in August 2021, Robinhood shares topped $70 each. Nearly 90 percent of that value has vanished. The meme stock frenzy expressed through Robinhood’s trading app is a distant memory. In an effort to restart that lost buzz, the US low-cost brokerage offers users to trade stocks around the clock.

Robinhood started with a select basket of popular stocks and exchange-traded funds. Starting this week, some users will be able to trade between 8pm Eastern Time on Sunday and 8pm on Friday. The service will be available to everyone in June.

Robinhood’s rivals will ask “so what?” Investors who wish to trade outside the standard hours can already do so. Brokerage platforms such as Interactive Brokers, E*Trade and TD Ameritrade all allow overnight trading for some stocks and ETFs.

The new service will make the process as easy as possible. It will do nothing to prop up Robinhood’s beleaguered stock price or cut its surging losses.

The young investors who fueled Robinhood’s meteoric rise aren’t trading much these days. Monthly active users on the platform totaled just 11.8 million during the first quarter. This is down from 15.9 million a year ago and is about 45% down from 21.3 million at the height of the trading frenzy.

Robinhood’s main revenues come from the controversial practice of selling clients’ trades to other brokers for execution. This is shriveled. This channel’s revenue was just $207 million in the first quarter compared to $218 million a year ago and $420 million in 2021. Robinhood now makes more money from customers’ idle cash, with net interest revenue rising by 278% to $208 million.

These gains are unsustainable. The US Federal Reserve is expected to suspend rate hikes this year and may reduce them thereafter. Robinhood needs investors inspired by Reddit’s WallStreetBets thread — or their successors — to give it a lift.

Round-the-clock trading, which offers less liquidity and higher price volatility, will not tempt day traders. Only a bull market can do that.