(Yahoo!Finance) - Online brokerage Robinhood (HOOD) is rolling out retirement accounts for users of its mobile app, a move that comes as the retail trading frenzy that lifted the company's fortunes last year fades.
Robinhood will offer customers a 1% match on its traditional or Roth IRAs, the company said Tuesday. Users can start investing on deposits of up to $1,000 before contributions settle into their accounts.
The launch brings Robinhood closer to competing more directly with established brokerages like Fidelity, Charles Schwab, and Morgan Stanley’s E*TRADE, which have participated in the marketplace for online retirement accounts for years.
Prospective customers can apply to be waitlisted for Robinhood Retirement starting Tuesday and can expect to receive access on a rolling basis in coming weeks, but full availability on the offering is set to begin in January.
Robinhood benefitted from a retail trading boom at the start of the COVID pandemic as lockdowns and stimulus checks drove flocks of individual investors to online trading. But as the economy re-opened and monetary tightening by the Federal Reserve spurred a rout across equity markets this year, the popularity of its business faded.
In August, the platform announced it was slashing 23% of its workforce, a second round of layoffs after cutting 9% of its full-time staff in April.
Active monthly users totaled 12.2 million in Q3, according to the company’s latest available quarterly report — a decline of 1.8 million users from the prior quarter.
On Robinhood’s third-quarter earnings call, Chief Executive Officer Vlad Tenev said retirement accounts would be available to users "just in time for the New Year and the heart of IRA season."
“I think you'll really like what the product is going to look like and the value prop for customers,” Tenev said during the call. “And we're polishing it and making sure that it looks great, but we feel good about rolling it out just in time for the tax season.”
The company had 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 more instruments to Robinhood, we haven't been hearing a lot of customers requesting those specifically,” Tenev said in the third-quarter call. “That said, we understand that with retirement and as we continue to add more tools for long-term investors who are diversifying, we might begin to see more feedback about that.”
Shares of Robinhood were down roughly 48% year-to-date as of Monday's close.
By Alexandra Semenova · Reporter
