Robinhood’s 43% Revenue Decline Sends Stock Down

London, United Kingdom - October 05, 2018: Screenshot of Robinhood Markets, Inc.
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Robinhood released its first quarter earnings on April 28, revealing that revenue decreased 43%. Following the news, the stock took a huge hit, and was down 10.4% in pre-market trading April 29.

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The stock is down 45% year-to-date. The shares have fallen 73% since its July 2021 initial public offering, and 86% from its record of $70.39 set on August 8 last year, according to The Wall Street Journal.

The company’s net revenues decreased to $299 million, compared with $522 million in the first quarter of 2021, the company said in its earnings release.

In addition, transaction-based revenues decreased 48% to $218 million, compared with $420 million in the first quarter of 2021, with cryptocurrencies decreasing 39% to $54 million, compared to $88 million in the first quarter of 2021.

The company narrowed its net loss compared to the corresponding quarter last year, with $392 million, compared with a net loss of $1.4 billion.

Also reflecting the company’s struggles, monthly Active Users (MAU) decreased 10% to 15.9 million for March 2022, compared with 17.7 million for March 2021 during which the company said it experienced high trading volumes and account sign-ups as well as high market volatility, particularly in certain sectors.

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“We’re seeing our customers affected by the macroeconomic environment, which is reflected in our results this quarter,” said Jason Warnick, Chief Financial Officer of Robinhood Markets. “At the same time, we’ve also made progress on our long-term plans and continue to pursue them aggressively.”

Just a few days before the earnings release, the company announce it was laying off 9% of its workforce, as GOBankingRates previously reported.

Earlier this month, Robinhood announced it acquired U.K.-based electronic money institution and crypto-asset firm Ziglu in an effort to expand its global footprint, a move that might also help the company diversify.

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“This quarter saw our product development engine gain velocity with the rollout of some of our most requested features and capabilities,” Vlad Tenev, CEO and Co-Founder of Robinhood Markets, said in the earnings release. “With the introduction of the Robinhood Cash Card, the release of crypto wallets to all customers, the addition of new coins to our platform, and our agreement to acquire Ziglu Limited, we’ve made huge strides against our roadmap. Looking ahead, we have a suite of new products and services slated for release that we believe will excite and delight our customers.”

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In March, Robinhood announced it was extending trading hours “to build a world where people have the flexibility to invest on their own timelines and on their own terms,” sending the stock up. Following the announcement, the stock — which was down 13.7% year-to-date — closed at 24.2% on March 29.

In an investors earnings call on April 29, Tenev acknowledged the challenging environment. He said, “but make no mistake, Robinhood is still playing offense and charging ahead. We are continuing to execute on our 2022 road map. And we’ve got several new products in flight that we believe will add value to customers while generating significant revenues,” according to the transcript of the call.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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