Business

Robinhood’s growth lost a year after meme stock went crazy

Shares of retail brokerage Robinhood fell more than 12% in after-hours trading after it missed its revenue target for the final quarter of 2021, as retail trading enthusiasm in the stock memes and cryptocurrencies fade away.

Robinhood said it expects revenue to drop 35% in the current quarter to less than $340 million from the first quarter of 2021, the high of stock trading frenzy meme.

The brokerage, which has been synonymous with an increase in daily investors’ transactions since the pandemic began, reported net sales of $363 million for the fourth quarter of 2021, $7 million less. la compared to expectations. Net loss was $423 million.

Robinhood has grow fast, adding 10 million funded accounts to its platform by 2021 and doubling in size, with more than half of new signups coming from first-time investors.

January market correction is the first test of how traders new to the rising markets will react during downturns, analysts say.

Robin Hood hero public in July much fanfare, with a valuation of $38 a share. But the brokerage has faced difficulties as forces pushing it to its high initial public offering valuation, such as financial stimulus and a bull market, have stalled. The broker’s stock has lost two-thirds of its value since its IPO and is down 83% from its August high of $85. The stock price was at $10.20 in after-hours trading.

The broker’s main source of revenue, order-line payments, has also slowed. For the quarter, Robinhood’s revenue from the system, in which large traders pay brokers for their orders, increased 12 percent year-over-year to $263 million, but has lagged behind. compared with the previous quarter, when it generated $267 million in transaction-based revenue.

Revenue from Cryptocurrency trading, vital to the company’s revenue, grew 304% year-over-year to $48 million, but down from $51 million in the third quarter.

Robinhood focuses on new products such as savings products to diversify its revenue, placing significant hopes for the future in its crypto wallet. Crypto wallet is slated for release at the end of March.

“This year, we will expand the ecosystem of products that make Robinhood the best place to start investing,” said Vlad Tenev, co-founder and chief executive officer.

The broker’s results come almost a year after thousands of retail traders rallied on the social media platform Reddit to push the prices of a lucky few. such as GameStop.

The euphoria in trading then spurred millions to join retail brokerage platforms, bringing huge growth to those companies. But these trading levels are never sustainable, analysts say.

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