Robinhood up in pre-market after stock buyback announcement

The buyback programme has been approved by the board of directors of the firm, enabling Robinhood to repurchase up to $1 billion of its outstanding Class A ordinary shares.

"Using share prices as of market close, this would mean the company could repurchase nearly ~49M shares, or 6% of shares outstanding," the analysts at Barclays stated in a report.

Starting in the third quarter of 2024, the transfer is expected to take place over the course of the following two to three years. Crucially, there is no defined expiration date for the buyback scheme.

"Today's news is a step for the company to address the large number of shares outstanding, which could be supportive over time from a valuation perspective," said Barclays.

Barclays believes that Robinhood is somewhere between fintech and financials. Fintech businesses often trade on gross profit or EBITDA multiples, whereas financial equities typically trade on P/E multiples.

(Sources: investing.com, reuters.com)