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Robinhood (HOOD) 24 Hour Market for trading individual stocks like Tesla launches next week

Robinhood continues to innovate in ways to make investing more like a casino, with 24/5 trading on individual stocks launching next week.

Asif Khan

May 10, 2023 3:45 PM

Robinhood

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Robinhood just reported the company's earnings results, but the real story is not the Q1 2023 report. Robinhood announced the launch of a 24 Hour Market that will allow users to trade or invest in individual stocks 24 hours a day, five days a week.

We had a great start to the year in Q1, which is a testament to our relentless pursuit of innovation - and the launch of 24 Hour Market next week shows we're not slowing down" said Vlad Tenev, CEO and Co-Founder of Robinhood Markets.

Robinhood announced the 24 Hour Market in the Q1 2023 earnings results press release, but WSJ also dug up some more information. While some trading platforms allow for trades to be made as early as 4:00 a.m. ET and as late as 8:00 p.m. ET, Robinhood 24 Hour Market will allow trades to be executed between 8:00 p.m ET and 4:00 p.m. ET. Trade orders will be routed through overnight trading platform Blue Ocean. Market makers Virtu Financial and Jane Street Group will be on the other side of trades, profiting off of the order flow.

Existing extended-hour trading on United States exchanges are also known for low volume and poor price discovery, so it remains to be seen just how bad of an idea Robinhood 24 Hour market will be. Today's announcement is especially baffling coming from the company that had to turn off the GME buy button in 2021 because of liquidity issues. 

Robinhood likes to paint their business as being pro-consumer, and the company has found some success as a middle-man that has given extremely small investors a chance to invest what they can in securities via fractional share ownership. Combining fractional share ownership with 24 Hour/5 Day trading opens Robinhood and the company's pay-for-order-flow (PFOF) partners to game the system even more. 

Unlike U.S. stock market exchanges whose data feeds are not operated overnight, Blue Ocean is not required to report to a securities information processor(SIP) because the entity is not considered an exchange. Blue Ocean has partnered with several Asian brokerages to allow investors to make U.S. stock trades during daytime hours in Asia.

TD Ameritrade and E*TRADE have offered some overnight trades on ETFs, but today's Robinhood 24 Hour Market announcement is a first for stock traders. Why anyone would trust Robinhood to provide the best price discovery in an overnight market being gamed by PFOF market makers is beyond me, but there are still people who think bankrupt Bed Bath & Beyond (BBBYQ) is a steal.

When Robinhood 24 Hour Market launches next week, investors and traders will be able to trade 43 popular stocks including Tesla, Amazon, and Apple according to WSJ. With over $78 billion of assets under custody, and 11.8 monthly active users (MAUs), Robinhood clearly has maintained the trust of some of the public. The affordability benefits of fractional share ownership were a decent selling point in 2020-2021, and the 24 Hour Market could be another gimmick that could be a nice piece of cheese to lure obsessive investors into the platform.

Open the damn casino
by u/Happystrim in wallstreetbets

Many r/WallStreetBets traders clamor for the casino to open up each day, and Robinhood 24 Hour Market certainly is a step towards the same model that many successful gambling apps have found success with. While Vegas is 24/7, this new 24 Hour Market will only operate from Monday through Friday at launch, and what happens in Robinhood will not stay in Robinhood when trader's have a position go sideways on them.

This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.

Full Disclosure:

At the time of this article, Shacknews primary shareholder Asif A. Khan, his family members, or his company Virtue LLC had the following positions:

Long GameStop via GME shares (partially hedged with out-of-the-money put options)

Asif Khan

CEO/EIC/EIEIO

Asif Khan is the CEO, EIC, and majority shareholder of Shacknews. He began his career in video game journalism as a freelancer in 2001 for Tendobox.com. Asif is a CPA and was formerly an investment adviser representative. After much success in his own personal investments, he retired from his day job in financial services and is currently focused on new private investments. His favorite PC game of all time is Duke Nukem 3D, and he is an unapologetic fan of most things Nintendo. Asif first frequented the Shack when it was sCary's Shugashack to find all things Quake. When he is not immersed in investments or gaming he is a purveyor of fine electronic music. Asif also has an irrational love of Cleveland sports.