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Business


ROBINHOOD STOCK PLUMBS NEW DEPTHS AFTER REVENUE TUMBLES 43%

 * Brokerage dismissed 9% of its full-time workforce this week
 * Stock has lost almost three-quarters of its value since IPO


WATCH: Robinhood revenue fell 43%.Markets: The Close.”
By

Annie Massa

+Follow
April 28, 2022, 8:10 PM GMTUpdated onApril 28, 2022, 9:02 PM GMT


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Robinhood Markets Inc., the financial upstart that drew millions of novice
investors during the early days of the pandemic, is struggling to prove itself
as a public company. 

First-quarter revenue tumbled 43% and the stock cratered anew in late trading
Thursday, the latest signs that shareholders looking for a turnaround may be
hard-pressed to find one.

Two days after announcing that it’s cutting 9% of full-time staff, the brokerage
posted a first-quarter adjusted loss of $392 million, or 45 cents a share, that
was wider than the 38 cents that Wall Street analysts expected. Revenue of $299
million missed the average estimate of $352.9 million, according to a statement
Thursday.




“We’re facing a really challenging macro environment,” Chief Financial Officer
Jason Warnick said in a call with reporters. Throughout most of its nine-year
history, he added, Robinhood has operated amid low inflation and rock-bottom
interest rates -- an environment that has drastically changed in recent months. 





While enthusiasm from small-dollar investors helped drive Robinhood’s July
initial public offering, it remains to be seen whether they’ll stick around to
use a variety of features the company is rushing to release. First-quarter
transaction revenue totaled $218 million, a 48% decline from a year earlier,
while average revenue per user dropped 62% to $53. Monthly active users slid 10%
to 15.9 million.


TROUBLING TREND

Monthly active users have dropped since pandemic trade boom



Source: Company data





Robinhood will start to release some metrics on a monthly basis, in order to
give investors a more detailed picture of its trading volumes and active users,
and other aspects of the business. 



Shares of the Menlo Park, California-based Robinhood slumped 12% to $8.91 in
extended trading at 4:57 p.m. in New York. The stock had plunged 73% since the
IPO through the close of regular trading.

See also: Robinhood Cuts Jobs as Pandemic Sizzle Gives Way to New Reality 



The first-quarter results stand in stark contrast to the same period of 2021,
when a surge in meme stocks such as GameStop Corp. and AMC Entertainment
Holdings Inc. drew throngs of retail investors into the market, with Robinhood
playing a starring role in the frenzy. That came with a gusher of new accounts.

For now, Robinhood is delivering on its promise to introduce new products. Plans
to expand beyond stock, options and cryptocurrency trading are already
progressing. In recent months, Robinhood readied or debuted a range of features,
including a spending account, stock lending, crypto wallets and retirement
accounts.





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