Robinhood stock rises 3% after announcing $1 billion stock buyback plan By Investing.com

Robinhood (NASDAQ:) shares rose more than 3% in pre-market trading on Wednesday after the broker announced plans for a stock repurchase program.

The company’s board of directors has approved a repurchase program that will allow Robinhood to repurchase up to $1 billion of the company’s outstanding Class A common stock.

“Using the share price at market close, this means the company could repurchase approximately 49 million shares, or 6% of outstanding shares,” Barclays analysts said in a note.

This measure is scheduled to be implemented over the next two to three years, starting in the third quarter of 2024. Importantly, the stock repurchase plan does not have a set expiration date.

“Today’s news is a step forward for the company as it deals with a large number of outstanding shares, which could be supportive from a valuation perspective over time,” Barclays said.

“In our view, Robinhood straddles “fintech” and “finance.” Financial stocks tend to trade on P/E multiples, while fintech companies tend to trade on gross profit or EBITDA multiples.”

HOOD stock is up more than 60% this year, outperforming the broader market significantly.