Robinhood Rolling Out Stock Lending Feature

Robinhood users who want to potentially get some extra return from their investment holdings may soon have the opportunity to do just that. This week, the app announced the launch of a new Stock Lending feature. According to a blog post on the company’s site, this option will allow investors to earn passive income by lending out their holdings. When users opt into the program, Robinhood will match up lenders and borrowers. Then, the lending customer will be able to track their earnings and positions in the app. Additionally, they’ll be able to disable the feature at any time. Furthermore, users will still be able to sell shares even if they are on loan. Currently, Stock Lending has begun rolling out to some Robinhood customers, with the app estimating that it should be available to all eligible users by the end of May.

In order for stocks to be eligible for lending, they must be fully paid securities. This means that fractional shares and shares held in accounts with a margin balance will not be able to participate. Robinhood also notes “securities with limited supply have greater potential to be loaned out and the potential to yield greater returns than securities where supply is more liquid.”

Announcing the new feature, Robinhood’s Chief Brokerage Officer Steve Quirk said, “Our version of Stock Lending empowers customers to put their investments to work while keeping it simple. Robinhood does the work of finding borrowers and managing transactions while customers can add a potential source of passive recurring income to their portfolio.” Quirk went on to add, “We’re excited to break down yet another barrier and democratize a product that has been historically preserved for the wealthy with high barriers to entry.”

The announcement of Stock Lending comes as Robinhood has attempted to grow its platform and diversify revenue following an earnings miss in Q1. Last month, the company announced it was adding support for four more cryptocurrency assets, including the oft-request SHIB. Prior to that, Robinhood also aimed to appease fans by finally rolling out crypto wallets. Elsewhere, the app also recently revealed an overhaul of its former Cash Management account, converting it to a product called Robinhood Cash Card instead.

While the past few months haven’t been the greatest for Robinhood, the company has continued to introduce some interesting ideas. What’s more, although additions such as the recent crypto listing and wallets were things that users had long been asking for, this Stock Lending program seems to be further outside of the box. Of course, it remains to be seen how well the program works or how much customers can realistically expect to profit from the stock lending (not to mention the risks associated). Nevertheless, it’s clear that Robinhood isn’t giving up just yet, making them a continually intriguing company the watch.

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Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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