Robinhood (NASDAQ:HOOD) Markets stock rose over 3% in premarket trading Wednesday after the broker unveiled plans for share repurchase program.
The company's board of directors has given the green light for a Repurchase Program, allowing Robinhood to buy back up to $1 billion of its outstanding Class A common stock.
"Using share prices as of market close, this would mean the company could repurchase nearly ~49M shares, or 6% of shares outstanding," Barclays (LON:BARC) analysts said in a note.
The move is poised to unfold over the next two to three years, starting in the third quarter of 2024. Importantly, the buyback plan does not come with a set expiration date.
"Today's news is a step for the company to address the large number of shares outstanding, which could be supportive over time from a valuation perspective," Barclays continued.
"In our view, Robinhood straddles "fintech" and "financials." Financials stocks tend to trade on P/E multiples, while fintech companies tend to trade on gross profit or EBITDA multiples."
HOOD stock rose more than 60% this year, notably outperforming the broader market.