Robinhood offers 1% retirement match as retail boom fades

Online brokerage Robinhood (HOOD) is rolling out retirement accounts for users of its mobile app, a move that comes as the retail frenzy that made the company so successful last year wanes.

Robinhood will offer customers a 1% match on its traditional or Roth IRAs, the company announced Tuesday. Users can start investing on deposits of up to $1,000 before contributions settle in their accounts.

The launch brings Robinhood closer to more direct competition with established brokerages such as Fidelity, Charles Schwab and Morgan Stanley’s E*TRADE, which have participated in the online retirement account market for years.

Robinhood Markets, Inc. CEO and co-founder Vlad Tenev holds a t-shirt on Wall Street after the company's IPO in New York, U.S., July 29, 2021. REUTERS/Andrew Kelly

Robinhood Markets, Inc. CEO and co-founder Vlad Tenev holds a t-shirt on Wall Street after the company’s IPO in New York, U.S., July 29, 2021. REUTERS/Andrew Kelly

Prospective customers can request to be placed on the waitlist for Robinhood Retirement beginning Tuesday and can expect to receive continued access in the coming weeks, but full availability of the offer is expected to begin in January.

Robinhood benefited from a retail boom at the start of the COVID pandemic as lockdowns and stimulus checks drove flocks of individual investors into online trading. But as the economy reopened and monetary tightening by the Federal Reserve sent stock markets into a rout this year, the popularity of its activity has faded.

In August, the platform announced it was cutting 23% of its workforce, a second round of layoffs after cutting 9% of its full-time workforce in April.

Monthly active users totaled 12.2 million in the third quarter, according to the company’s latest available quarterly report, down 1.8 million users from the previous quarter.

During Robinhood’s third-quarter earnings call, CEO Vlad Tenev said retirement accounts would be available to users “just in time for the New Year and the height of IRA season.”

“I think you’ll really like how the product will look and add value to customers,” Tenev said on the call. “And we’re tweaking it and making sure it looks great, but we feel good rolling it out just in time for tax season.”

The company promised to roll out retirement account options by mid-2022, executives said in previous earnings calls.

Retirement accounts will offer access to stocks and exchange-traded funds (ETFs), the company said.

“In terms of bonds and adding additional instruments to Robinhood, we haven’t heard a lot of customers asking for them specifically,” Tenev said on the Q3 call. “Having said that, we understand that with retirement and as we continue to add more tools for long-term investors who are diversifying, we may start to see more comments on this.”

Robinhood shares were down about 48% year-to-date as of Monday’s close.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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