Robinhood
Many on social media were mocking Robinhood's ethos of 'democratizing finance' as its IPO has likely resulted in huge losses for any buyers which also included the company's userbase. Further, it's clear based on trading volumes that many were buying meme stocks, growth stocks, and cryptocurrencies which are down by over 50% or more in many cases (including Robindhood's stock).
Inside the Numbers
In Q1, Robinhood posted a bigger loss than expected at $0.45 per share vs expectations of $0.36 per share. Revenue also fell short of expectations at $299 million vs. $355.8 million and was down 43% compared to last year.
More concerning, the company's monthly active users declined to 15.9 million from 17.7 million last year and 17.3 million in the previous quarter. Average revenue per user declined to $53, down from $137 last year and $64 last quarter.
Options revenue and cryptocurrency revenue were down 39%, while equities revenue was down 79%. The company has been working hard to jumpstart its growth including introducing new products and features including extended trading hours. Part of these efforts also involves reducing costs which is why the company cut its workforce by about 9%.
Overall, Robinhood's shares are now down 76% from its IPO price and 89.5% from it's all-time high a few days after its IPO when users were piling into shares during its period of low-float trading. It remains quite expensive with a $9 billion market cap and no path to profitability. This could be excused if it was continuing to add users, but this is also no longer the case.
It's possible that the best option for the company would be an acquisition by another fintech or traditional financial company to get access to the company's large userbase of Millennials and Generation Z.
