Robinhood Chief Brokerage Officer (CBO) Steve Quirk announced the company, a financial service firm founded in 2013, rolled out its Stock Lending Program on May 4, allowing customers to earn extra income on the stocks they already own.
“Our version of Stock Lending empowers customers to put their investments to work while keeping it simple,” Quirk wrote in a blog post. “Robinhood does the work of finding borrowers and managing transactions while customers can add a potential source of passive recurring income to their portfolio.”
Quirk said financial institutions and other market participants often borrow stocks for many reasons, including to cover deficits, failed deliveries, collateral, or to cover short sales.
“This is why stocks with low market availability and high demand are more likely to be borrowed,” according to the post.
The feature will be available to all customers by the end of May. To be eligible for Stock Lending, customers will need to have at least $5,000 in total account value, at least $25,000 in reported income, or any trading experience, according to the company.
Keeping with their mission statement of making stock transactions available to users with lower balances, the thresholds needed for program entry are lower than other brokers.
The feature was made available to select users this week and is expected to roll out to all of the platform’s eligible users by the end of the month.
The move comes as Robinhood’s stock (Nasdaq: HOOD) has tumbled recently, following poor earnings reports and customer retention issues. On April 28, Robinhood reported its first-quarter earnings, revealing a 43% decrease in revenue. As a result of the news, the stock dropped 10.4% in pre-market trading on April 29, according to GOBankingRates.
The New York Post reports that last year, the company courted controversy at the height of the Reddit-backed GameStop purchasing frenzy when Robinhood temporarily disabled users’ ability to buy and sell the stock. Another major issue the company faces is the decline in cryptocurrency transactions, as users have begun to migrate to other platforms.
CNBC reports that in Q2 of 2021, $233 million worth of Bitcoin and other cryptocurrencies were traded on Robinhood. Third-quarter trading, however, dropped to $51 million.
According to the recent reports and forecasts issued by the company, those numbers may continue to decrease into 2022.