Robinhood Markets plans to let customers trade a curated list of U.S. stocks and ETFs on weekends, closing the only gap left in its 24 Hour Market, pending regulatory review. Equities made up just 10% of Robinhood's revenue in the second quarter, and one Motley Fool analyst estimates weekend hours would add no more than about 1% to overall sales. The company is also cutting fees on new crypto and earnings-contract products ahead of their launches.
At its HOOD Summit in Houston on Sept. 29, Robinhood said it plans to let customers trade a curated list of U.S. stocks and ETFs on weekends, with a launch expected early next year pending regulatory review. Robinhood's 24 Hour Market already lets customers buy and sell many popular stocks and ETFs from Sunday at 8 p.m. ET until Friday at 8 p.m. ET, 120 hours a week — leaving weekends as the only gap the new plan would close.
Equities remain a small slice of revenue
Equities revenue, which comes mainly from payment for order flow, almost doubled year over year to $129 million in the second quarter, up from $82 million in the first quarter. That lifted equities to around 17% of transaction-based revenue, compared with about 13% three months earlier and 12% a year before. But against total revenue of $1.31 billion, up 32% year over year, equities supplied just 10%.
Customers traded a record $956 billion in stock during the quarter, up 85% from a year earlier, meaning Robinhood earned around $1.35 of equities revenue per $10,000 traded. That growth has since slowed: customers traded 68% more stock by dollar value in August than a year earlier, according to Robinhood's monthly operating data.
Weekend hours likely add only a modest boost
Adding weekends would bring the 24 Hour Market to all 168 hours a week, about 40% more trading time than today. At the second quarter's pace, equities revenue runs at around $516 million a year, so capturing the full 40% increase in hours would add about $206 million, or roughly 4% of Robinhood's yearly revenue pace of $5.2 billion.
Motley Fool analyst Daniel Sparks said he doesn't expect the company to get near that ceiling, since weekend trading will start with a limited list of stocks and ETFs and some Saturday trades could simply shift Monday-morning volume rather than add new revenue. Sparks estimated a 5% to 10% boost to equities revenue, adding about $26 million to $52 million a year, at most 1% of sales.
Cheaper fees ahead of other launches
Robinhood is also rolling out perpetual futures, leveraged crypto contracts that never expire, to eligible U.S. customers. The contracts offer up to 10x leverage on Bitcoin and Ether and 3x on six other coins, with a trading fee of just 0.01% through the end of the year. The product could help a shrinking crypto business, whose second-quarter revenue dropped 38% from a year earlier to $100 million.
Earnings contracts, exchange-listed binary options tied to company-specific performance metrics, are expected to launch in October pending regulatory approval, also without contract fees through year-end. Starting in October, Robinhood is adding 35% more options trading hours for its most popular symbols — arguably the bigger opportunity, since options were the company's largest transaction line at $342 million last quarter.
At about $112 a share as of this writing, Robinhood trades around 38 times earnings using analysts' forecasts for 2027, a premium that assumes the company keeps adding new revenue streams for years to come.
Source: The Motley Fool
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