Robinhood to launch stock-lending feature

The trading platform’s new offering would let users generate passive income by loaning out their stocks to other financial institutions. It’s set to roll out in the first half of 2022, according to a Robinhood spokesperson.

Why should we care?
Robinhood clearly has two competitors in mind by prioritizing passive-income products. On one side are conventional brokerages: Fidelity, E*Trade, and Charles Schwab all allow customers to loan stocks. On the other side are crypto-based entities like (SEC-maligned) BlockFi, which have seen their popularity surge at the expense of retail trading. By lying somewhere in between these two factions—one more old school and the other nascent and high-yield but volatile—Robinhood looks to offer (1) a more regulated financial instrument than BlockFi’s now-virtually-defunct savings account, and (2) a more intuitive and modern user experience than FI competitors. And, of course, Robinhood wants to appease dissatisfied investors by diversifying its service portfolio. That effort seems to be paying off already. Shares of Robinhood jumped by 16% on Wednesday, which had previously been down 38% this year. It remains to be seen if Robinhood can turn public use of this new product into a sustained, positive path for its business. Previous public-relations woes suggests it may struggle on this front.