By Robinhood Markets shares experienced a drop in value after failing to meet Wall Street’s revenue expectations for the third quarter. The decline was attributed to a slowdown in transaction revenue and a decrease in monthly active users.
According to Robinhood (HOOD), total net revenue for the quarter increased by 29% compared to the same period last year, reaching $467 million. This growth was primarily driven by higher net interest and other revenue streams. However, analysts had anticipated revenue of $480 million, making Robinhood’s actual performance fall short of expectations.
Although Robinhood reported a net loss of 9 cents per share for the third quarter, it managed to outperform analysts’ forecasts, which had predicted a loss of 10 cents per share.
Transaction revenue experienced a decline of 11%, amounting to $185 million. This includes a 13% drop in equities transaction revenue and a significant 55% plummet in crypto revenue.
During the Covid-19 pandemic, Robinhood’s platform gained substantial popularity, fueling a meme-stock craze as retail investors flocked to its commission-free services. This surge in user engagement led to a peak of over 21 million monthly active users by the second quarter of 2021.
However, in contrast to previous growth, Robinhood reported a 16% decrease in monthly active users compared to the same period last year, totaling 10.3 million. This figure fell short of Wall Street’s expectations of 10.7 million monthly active users by the end of the third quarter.
CEO and co-founder Vlad Tenev expressed optimism about Robinhood’s future, stating, “It’s been nearly 10 years since we founded Robinhood and we’re just getting started. Looking ahead, we remain focused on providing industry-leading products that cater to our customers’ financial needs, increasing our market share, expanding internationally, and driving positive change within the industry.”
Robinhood Retirement and Robinhood Gold See Significant Growth
In less than a year after its launch, Robinhood Retirement has experienced remarkable growth, with nearly 400,000 accounts and assets exceeding $1 billion. Additionally, the number of subscriptions to Robinhood Gold, the company’s premium trading service, has surged to over 1.3 million in the quarter.
Expanding its product offerings, Robinhood has also increased the selection of stocks and exchange-traded funds available on its 24-Hour Market to a total of 95.
Robinhood’s Future Plans
Robinhood has announced its intention to expand its brokerage operations in the U.K. Furthermore, the company plans to enter the European Union with cryptocurrency trading following this expansion. Robinhood aims to bring its intuitive mobile experience to the futures trading industry.
Recent Developments
In an effort to reclaim ownership of its stock, Robinhood repurchased more than 55 million shares for approximately $605 million from a company that was once owned by Sam Bankman-Fried. This repurchase was made through a share purchase agreement with the U.S. Marshall Service.
Earlier this year, Robinhood underwent its third round of layoffs, resulting in the reduction of around 7% of its full-time staff, equivalent to approximately 150 employees. These job cuts occurred shortly after the announcement of Robinhood’s acquisition of credit-card start-up X1 for a sum of $95 million.
Financial Outlook
Robinhood projects total operating expenses for the year to be approximately $2.4 billion, an update from the previous estimate of $2.3 billion to $2.4 billion.
Despite the overall positive performance, Robinhood’s shares experienced an 8.5% decrease in after-hours trading on Tuesday, following a year-long increase of over 19%.
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