Robinhood Set to Lauch in the UK as International Expansion Takes Shape

Popular stock trading app Robinhood (NYSE: HOOD) is set to launch its services in the UK as the US-based company takes steps to expand internationally. It is the company’s third attempt to launch in the UK after two failures.

To begin with, Robinhood would let UK users trade in around 6,000 US stocks and ADRs without brokerage and any forex charges throughout the day on all trading days. It would also offer 5% AER on the uninvested cash.

Prior to Robinhood, Webull and Public also entered the UK market in 2023. Robinhood sees a big opportunity in the UK where only about 12% of retail household savings are in stocks which is less than a third of the US.

Robinhood enters the UK market

Jordan Sinclair, president of Robinhood UK said, “When I look at the U.K., it kind of feels a little bit like what the U.S. would have looked like in 2013, where the market is still dominated by traditional brokers charging high fees.”

Sinclair is particularly positive about the 24-hour trading window that Robinhood provides and said, “You wake up in the morning, you read the news headlines, and then you have to wait” He added, “Customers actually can make a trade and choose their investment strategy and actually act on that market news.”

Notably, Robinhood disrupted the US brokerage market with its low-cost strategy and gained traction among the younger cohorts. The app was quite popular among Reddit traders at the height of meme stock mania in 2021. However, the company’s monthly active users have halved from the 2021 peak as volatile markets and crash in meme and growth stocks led to massive losses for many Robinhood users.

Robinhood plans full UK rollout by 2024

Meanwhile, Robinhood plans to have full availability in the UK by early 2024 and has for now opened a waiting list for users who would get early access over the next few weeks. Notably, this would be Robinhood’s third attempt at entering the UK market. It was looking to enter the US market in 2019 as well and more than 300,000 people signed up for the service.

However, it ditched the plans in 2020 as there was a retail trading boom in the US amid the COVID-19 lockdowns.

It made the second attempt to enter the UK in 2022 and was looking to buy crypto trading app Ziglu. However, Ziglu went bankrupt and Robinhood ended up booking a $12 million charge on the investment.

HOOD’s international expansion

Meanwhile, Robinhood’s international expansion has been talked about for quite some time now. During the Q3 earnings, while answering a question from a retail investor about its expansion plans in Europe, Robinhood’s CEO Vlad Tenev said, “We should be live in the coming weeks. I’ll actually be there knocking on doors in the UK, maybe not literally, but with the team for the launch. And we also announced earlier in my opening prepared remarks that we will be offering crypto trading across the pond in the EU and that’s going to come right on the heels of the UK brokerage launch.”

Tenev termed both the launches as “exciting” and added “They expand the addressable market of customers we can serve with our financial products. And they’re really the first steps in what we see as a big opportunity for us growing the business internationally.”

HOOD’s interest income has soared amid higher interest rates

Meanwhile, even as the steep rise in interest rates has led to a fall in Robinhood’s trading volumes, its interest income has spiked and in Q3 2023 its net interest income almost doubled to $251 million and was more than the transaction revenues which includes revenues from trading of stocks, options, and cryptos.

The company however believes that while its interest income would drop once the Fed starts cutting rates, it would be offset with higher trading volumes.

HOOD stock is trading almost 2% higher in US premarket price action today as markets digest the news of its entry into the UK market. The stock nonetheless trades at less than a quarter of its 2021 IPO price of $38 and international expansion is one way the company believes it can return back to the growth trajectory.