Usually, we’d take the most “prominent” earnings in any given day for our top story. However, there’s just one story we cannot ignore today. Robinhood’s down 12.2% in afterhours because of earnings-related antics… (sorry Apple!)
Robinhood has been in decline for months. So what’s with this collapse? 🤔 Here’s the post-mortem from today’s earnings report:
Revenue: $362.7 million, +14% YoY (analysts expected $370.9 million)
Earnings loss per share: -$0.49 per diluted share (analysts expected -$0.45)
Net loss before income tax: $420 million, -2,310% YoY (analysts expected $362.1 million)
Monthly active users (MAUs): 17.3 million (down from 18.9 million in Q3; analysts expected 19.8 million.)
Those four bullet points pretty much outline everything wrong with Robinhood — things are going in the wrong direction. The company’s stock price makes that abundantly clear. 💀
Robinhood hopes it can turn its stock around with the long-awaited launch of crypto wallets. The platform presumably plans to add more pairs to trade than legacy cryptos, sh*tcoins, and Bitcoin/Ethereum. After all, transactions are how Robinhood makes most of its money. The problem is that equities and crypto-related trading are just not hitting like they used to, and the company is leaning on its options trading transaction revenues as a crutch.
Even then, everything about the company is behind where it was when the retail revolution was in vogue. That’s why the next two quarters could continue to test Robinhood’s (and its investors’) patience. The company will face its most aggressive comps in recent history in Q1 and Q2 (remember GameStop and Dogecoin?)
With that said, if investors like Robinhood at $85, they’ll probably love it at suppressed price points. It’s too early to call a bottom, but with the company worth less than $10 billion, it’s not out of the question that Robinhood could stage a recovery — or potentially get acquired by a large legacy player looking for a way to step into the fintech world. (Until we see more action, we’re betting the latter might be true.) 🎲
$HOOD is down 66.6% since IPO. Oof.