Robinhood to give users access to their paychecks two days early
Robinhood is developing a feature that would let users access their paycheck two days early as it looks to diversify and expand its offerings beyond trading, according to a Bloomberg report.
The feature is expected to be in the next version of the Robinhood app, the report adds. The technology would rival other fintech and banking companies like PayPal and Capital One that allow customers to get paid two days early.
Eligibility for the program is at the discretion of someone’s employer.
Robinhood did not immediately respond to request for comment.
Ian Rosen, partner at The Tifin Group and former CEO of StockTwits, said combining early access to a paycheck with an app that’s helped fuel meme stock trading could be a recipe for some problems.
“I think combining their current model with that product will definitely encourage some ill advised behavior.”
The newest version of the Robinhood app is expected to include other new features including hedging against bets on crypto and investing spare change; it’s unclear when the new version of the app will launch.
The news comes as Robinhood looks to expand its offerings beyond trading. Robinhood Chief Financial Officer Jason Warnick emphasized the company’s efforts to introduce new products last month in the company’s second quarter earnings call.
“We want to be the single place that our customers go to for all things money,” he said.
Robinhood shares have faltered in recent weeks after the company warned a trading frenzy that buoyed Robinhood’s profits could slow in coming months.
The Silicon Valley-based company said its second-quarter revenue more than doubled to $565 million — but mostly because of an explosion in crypto trading, a famously volatile space that could slow or face a regulatory crackdown at any time.
“We expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than in the prior quarter,” Robinhood said in a Wednesday statement.
Earlier this week shares dropped on news Securities and Exchange Commissioner Gary Gensler is open to a possible crackdown on payment for order flow. Payment for order flow — the sale of customer’s trades to market makers — makes up as much as 80 percent of Robinhood’s revenue.
Still, some investors note the stock is trading almost 28 percent higher than its IPO price of $38 per share.
Overall, it has been a bumper year for the company that saw its number of accounts more than double. The Menlo Park, Calif.-based company estimates it now has almost 22.5 million funded accounts, up from 9.8 million a year ago.