Robinhood Markets (NASDAQ:HOOD) stock is advancing in early trading after the financial services company yesterday revealed that it would buy back $1 billion of its own shares. As a result of the news, HOOD stock is trending on social media and on financial news websites.

The Details of Robinhood’s Stock Buyback Plan

The share buybacks are expected to kick off next quarter and continue for two to three years. The firm, however, noted that the number of shares it will buy back over the latter period would be based on “general business and market conditions, and alternative investment opportunities.” Robinhood noted that the value of HOOD stock will also play a role in determining the pace of the repurchases.

Robinhood indicated that it had decided to repurchase its shares partly because its sales and profits have risen. Last quarter, the firm’s revenue soared 40% versus the same period a year earlier to $618 million. What’s more, its net income came in at $157 million versus a loss of $511 million in Q1 of 2023.

Robinhood added that the repurchases demonstrate its “confidence” in its “financial strength and future growth prospects.” The company noted that it had also made the move in order to return value to its shareholders.

HOOD Stock: A Double Upgrade by Bank of America

Robinhood’s shares have been relatively strong since mid-May. That performance is at least partly due to a rare double upgrade by a major bank.

Specifically, on May 17, Bank of America raised its rating on the name to “buy” from “underperform.” The bank believes that the company is benefiting from improving user metrics, accelerating growth, higher margins, and an attractive valuation. The bank hiked its price target on the shares to $24 from $14.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines