Following dismal Q4 results, Robinhood
Robinhood's poor results aren't exactly surprising given the bear markets in "meme stocks" and cryptocurrencies which were two of its biggest sources of customers and revenue. Additionally for much of 2020 and 2021, Robinhood was one of the most popular apps on the app store, but it's consistently slid lower since then. Therefore, there was more of a "sell the rumor, buy the news" type reaction to Robinhood's earnings result which was abetted by the big rebound in markets.
Inside the Numbers
Given that Robinhood is in growth mode, analysts and investors are less concerned with earnings and more with revenue and metrics like monthly active users and funded accounts.
Overall, the company posted a loss of $0.49 per share in Q4 which was worse than estimates of $0.45 per share. The company's revenue did come in slightly better than expectations at $363 million vs $362 million.
One big reason for the stock's initial drop was that it forecast Q1 revenue at $340 million which would be 35% less than last year. Analysts were looking for $448 million in revenue.
Monthly active users came in at 17.3 million down from 18.9 million in Q3 and below estimates of 19.8 million.
In Q4, transaction-based revenue was $264 million. Options trading contributed $163 million, cryptocurrency trading added $48 million, and equities came in at $52 million. Crypto revenue has been declining since reaching $233 million in Q2. Barring a turnaround in the crypto markets, this is likely to continue in the next quarter.
The decline in meme stocks and cryptocurrencies has resulted in much less retail interest in the markets which is raising concerns that Robinhood's growth could stop especially on a year-over-year basis as Q1 and Q2 saw intense trading volumes in meme stocks and cryptocurrencies.
It's likely that the stock's surge is due to many of these issues already being priced into the stock as it's down more than 70% since its IPO and 30% this year. Of course, these numbers were much worse prior to the stock's more than 40% rally over the last couple of sessions.
The company's next growth avenue is geared towards international customers by opening up its crypto platform. However, this market is pretty saturated with plenty of options that have little differentiation.
