Robinhood to Let Users Lend Against Stock

Stock brokerage app Robinhood has launched a stock lending feature that lets its users lend out their fully paid stocks to borrowers recruited by the company.

As the company announced Wednesday (May 4) on its website, users will be paid once their stocks are lent successfully.

See also: Robinhood Q1: Fewer Retail Investors With Lower Account Balances Trading Less

“Robinhood does the work of finding borrowers and managing transactions while customers can add a potential source of passive recurring income to their portfolio,” Chief Brokerage Officer Steve Quirk said in the announcement. “We’re excited to break down yet another barrier and democratize a product that has been historically preserved for the wealthy with high barriers to entry.”

However, Robinhood stresses that stock lending may not be right for every customer, warning, “There is a risk that Robinhood Securities could default on its obligations to you under the Stock Lending Program and fail to return the securities it has borrowed.” Robinhood added that it will offer cash collateral for securities loans.

Once shares are loaned out, customers can track earnings, see their positions, and enable or disable Stock Lending using the Robinhood app. The program is set to become available to all customers by the end of the month.

The news came one week after Robinhood issued a quarterly earnings report that showed revenues falling 43%. That decline came as its monthly active user count dropped as well, by 10% year over year to 15.9 million.

CEO Vlad Tenev told investors the quarter was “the story of two competing forces, our accelerating product development juxtaposed against a difficult macroeconomic climate.”

Among its new products is an increase in the number of cryptocurrencies to trade, along with the Robinhood cash card.

Learn more: After Spurt of Pandemic-Driven Hiring, Robinhood Cuts 9% of Full-Time Staff

Last month saw Robinhood cut 9% of its workforce, citing the period of massive growth from 2020 to early 2021, which was fueled by factors that included the pandemic, low interest rates and stimulus payments from various governments.

“This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal,” Tenev wrote on the company blog. “After carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision to improve efficiency, increase our velocity, and ensure that we are responsive to the changing needs of our customers.”