Retail stock company Robinhood reported a larger-than-expected first-quarter loss and contraction, indicating that the boom in small-dollar trading that rocked Wall Street a year ago may have run out of steam.
Robinhood has emerged as one of the key players in last year ‘s meme stock epic, with retailers signing up for accounts and helping drive stock as fast as GameStop. This caused difficult comparisons in the first quarter, but the slowdown in commercial activity was even more dramatic than expected.
The Robinhood logo appears on a smartphone in a neat photo.
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“Our larger customers are still active, but we are seeing sharper reductions than those with lower balances,” CEO Vlad Tenev told a news conference with investors and analysts. “With market uncertainty, our customers have become more cautious with their portfolios.”
See what the company said compared to what Wall Street expected, based on a survey by Refinitiv analysts:
- Losses per share: 45 cents against the expected 36 cents
- Revenue: $ 299 million compared to $ 355.8 million expected
For the quarter ended March 31, Robinhood said its loss fell to $ 392 million, or 45 cents a share, from a loss of $ 1.4 billion, or $ 6.26 a share, a year earlier. Revenue fell 43% from $ 299 million a year earlier.
Robinhood said its monthly active users fell to 15.9 million from 17.7 million in the previous quarter and 17.3 million in the previous quarter. The company’s average revenue per user was $ 53, up from $ 137 a year ago and $ 64 in the previous quarter.
The main source of revenue of the brokerage is a practice known as payment for the flow of orders. Although trading is free from the customer’s point of view, Robinhood is making a difference in the transactions it sends to major trading houses.
In an effort to start generating revenue and users, Robinhood is introducing new products and features. The company announced in late March that it had extended trading hours.
Robinhood also released cryptographic wallets to customers earlier in April. In the first quarter, cryptocurrency trading revenue fell to $ 54 million, but exceeded $ 36 million in stock trading. Those numbers were $ 88 million and $ 133 million, respectively, a year ago.
Option trading was the largest revenue segment with $ 127 million, up from $ 198 million a year ago.
“This story was the story of two competing forces – the accelerating growth of our products is facing a difficult macroeconomic climate,” Tenev said.
Robinhood also monitors its costs. On Tuesday, Robinhood said it would cut its full-time workforce by about 9%, citing “dual roles and job functions” for the layoffs.
The company said Thursday it now expects operating expenses to rise between 2% and 5% in 2022, excluding equity-based compensation. Previous directives required an increase of 15% to 20%.
Tenev said the company aims to have positively adjusted EBITDA – or earnings before taxes, interest and depreciation – by the end of the year. That measure showed a loss of $ 143 million in the first quarter.
Robinhood went public in July 2021 at $ 38 a share, but the stock struggled to find traction. It closed at $ 10.09 per share on Thursday before falling after the results were released. The company’s shares closed down 2.8% on Friday.
Read the full press release here.
Robinhood HOOD Profits 1st quarter 2022
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