Personal Finance

Robinhood Shares Crater After Dismal Earnings, Monthly Active Users Fall 10% From A Year Ago


Shares of stock trading app Robinhood tanked roughly 8% late on Thursday after the company reported dismal first quarter earnings which showed that the platform lost over a million users and revenue plummeted 43% from what it was a year ago.

Key Facts

Shares of Robinhood plunged around 8% to fresh all-time lows immediately following the company’s first quarter earnings report, which came in well below analyst expectations.

Robinhood’s quarterly revenue fell to $299 million, a sharp 43% decrease compared to $522 million a year ago.

Transaction-based revenues plunged nearly 50% from the same period last year, amid a marked slowdown in options, cryptocurrency and stock trading from users on its platform, Robinhood said in its earnings release.

What’s more, Robinhood has struggled to retain users since last year, and the latest numbers aren’t pretty: Monthly active users decreased to 15.9 million for March 2022, compared to 17.3 million in December 2021.

Robinhood, which said it had experienced “high trading volumes and account sign-ups” in early 2021, now blamed the sharp decline on “users with lower balances, who are engaging less in the current market environment.”

The company also announced a change in the way it would report operational results, now intending to do so month-by-month, although it “no longer intend[s] to provide revenue guidance” to investors.

Surprising Fact:

Robinhood went public in July 2021 at $38 per share, but today the stock trades at around $10 per share, down over 45% so far this year.

Key Background:

Robinhood’s earnings release comes several days after the company announced it would layoff 9% of its workforce in an effort to slash costs and reduce “duplicate roles.” The stock fell on the news, which was “met with investor concern,” especially amid uncertainty about a rebound in the business, said Goldman Sachs analyst Will Nance in a recent note. “Some investors interpreted this announcement ahead of earnings as an ominous sign.”

What To Watch For:

Despite recent struggles, Robinhood still has a massive cash pile of $6.2 billion, which should keep the company in stable financial position, CEO Vlad Tenev said in a recent blog post.

Further Reading:

Robinhood’s Troubles Could Get Worse As Stock Hits Record Low Amid Layoffs And Looming Quarterly Earnings (Forbes)

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