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Robinhood shares tank after it loses users, forecasts weak revenue

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Vlad Tenev, co-founder and CEO of Robinhood rings the opening bell at the Nasdaq on July 29th, 2021.
Source: The Nasdaq

Stock-trading app Robinhood gave a bleak revenue forecast for the first quarter of 2022 on Thursday as it’s latest earnings report showed a decline in users.

Shares of Robinhood tanked 9% in after hours trading.

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The newly public brokerage anticipates first-quarter revenue of less than $340 million, down 35% compared to 2021.Wall Street’s consensus estimate was for $448.2 million in revenue for Q1, according to FactSet.

Monthly active users fell to 17.3 million last quarter from 18.9 million in the third quarter.

Net cumulative funded accounts totaled 22.7 million at the end of the fourth-quarter, about in-line with estimates. This is up from 22.4 million accounts in the third-quarter.

For the fourth quarter, Robinhood reported 49 cents per diluted share, wider than the 45 cent loss estimate collected by Refinitiv. However, Robinhood posted $363 million in revenue in the final three months of 2021, slightly above analysts expectations of $362.1 million.

Robinhood is about to face its toughest comps in the first and second quarters of 2022 following its record year in 2021 from events like the GameStop short squeeze.

Robinhood’s stock is more than 86% off its most recent high since the trading app’s July 2021 public debut. Shares are down more than 34% in January, bringing its market capitalization to less than $10 billion.

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Some of Robinhood’s stock weakness came after its last earnings report when lighter cryptocurrency trading caused a big revenue miss.

Third-quarter transaction based revenue totaled $267 million, with only $51 million coming from cryptocurrency trading. Revenue from crypto trading totaled $233 million in the second quarter, helped by interest in meme-inspired dogecoin.

For the third quarter, total net revenue came in at $365 million. Robinhood reported a net loss of $1.32 billion, or $2.06 per share, in the third quarter.

Net cumulative accounts dropped to 22.4 million in the third quarter from 22.5 million in the second quarter.

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