Shares of Robinhood Markets, Inc. HOOD gained 4% in the after-market trading following the company’s announcement of a share buyback plan. HOOD announced that its board of directors approved a share repurchase program authorizing it to repurchase up to $1 billion of its outstanding common stock.
While the plan does not have an expiration date, the company expects to buy back shares over two to three years, starting from third-quarter 2024.
The repurchase program does not obligate HOOD to acquire any particular amount of common stock and the plan may be suspended or discontinued at any time at the company’s discretion.
HOOD’s chief financial officer, Jason Warnick, stated, “As our business and cash flow have continued to grow, we’re excited to announce a $1 billion share repurchase program to return value to shareholders.”
For the past several months, Robinhood has been seeking to expand its services beyond mainstream trading. This March, the firm unveiled its first-ever credit card, known as the Robinhood Gold Card, which is available exclusively to Robinhood Gold customers.
Last year, in order to become a one-stop solution for financial services, HOOD acquired credit card company X1.
Thus, as HOOD ventures beyond trading, it will help the online trading app protect itself from market turbulences.
Driven by a constant increase in transaction-based revenues and net interest revenues, HOOD’s top line has been witnessing growth. Over the last four years (2019-2023), the company’s net revenues saw a compound annual growth rate of 61%. The upward trend continued in the first quarter of 2024.
For 2024 and 2025, revenues are projected to rise 28.5% and 10.7%, respectively.
Over the past three months, HOOD shares have gained 23.5% compared with the industry’s 12.6% growth.
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Currently, Robinhood carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Share Buyback Plans Announced by Other Firms
BayCom Corp. BCML announced its ninth stock repurchase program. Under the plan, the company’s board of directors authorized the buyback of 0.56 million shares.
The new program will start once BCML’s current plan either expires on Apr 21, 2025, or all the shares authorized get repurchased. The company announced the eighth share buyback program, authorizing 0.59 million shares, in August 2023. As of May 24, 2024, 12,627 shares were available under this plan.
WaFd, Inc. WAFD announced a share repurchase program. Under the plan, the board of directors authorized an additional buyback of 10 million shares. This brings the total authorization available to 11.8 million shares as of Mar 31, 2024.
In 2019, WAFD announced an additional share buyback of 10 million.
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