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Robinhood launches fractional share trading

Robinhood Markets Inc. announced plans to launch fractional share trading next week.

The Menlo Park, Calif.-based financial technology startup, most recently valued at $7.6 billion, wants to bring trading to the masses. It rose to prominence by pioneering commission-free trading, a feature that has now been widely adopted by online brokers. Fractional-share trading allows customers the ability to buy and sell fractional shares in high-priced stocks like Amazon.com Inc., The Walt Disney Co. and Berkshire Hathaway Inc. for as little as $1.

Robinhood is the latest in a wave of firms launching the trading option, as competition heats up to draw in younger customers. Major online brokers Charles Schwab Corp. and Interactive Brokers Group Inc. revealed plans to introduce fractional-share trading capabilities in October and November, respectively. Payment processor Square Inc. introduced the feature in its mobile app in October.

Robinhood also plans to allow customers to schedule recurring investments and automatically reinvest cash dividends back into their stocks and exchange-traded funds. The firm will roll out those features in early 2020.