Robinhood appears to have fallen out of favor with retail investors as its Q1 revenue slumped, recording a 43% decrease from $522M the year before.
The millennial-focused exchange Robinhood has experienced a sharp decline in trading activities for Q1 2022, according to the company’s latest financial report. The broader crypto market remaining bearish and the recent global equity selloffs have contributed to the disappointing financial figures, the report suggested.
- The Q1 report stated that the company’s total net revenue was $299 million, a 43% decrease from $522 million in the first quarter of 2021. Transaction-based revenue from trading cryptocurrencies declined 39% to $54 million.
- Similar to most high-growth tech firms, Robinhood has struggled with profitability – but it has substantially trimmed its loss over the year. The company reported a net loss of $392 million or $0.45 per share compared to $1.4 billion or $6.26 per share a year ago. However, Wall Street had expected a net loss of $0.36 per share, according to IBES data from Refinitiv.
- The company’s Adjusted EBITDA (non-GAAP) was negative $143 million – another striking decline from a positive $115 million recorded a year ago. Also, monthly active users fell 10% to 15.9 million for March 2022, compared with 17.7 million 12 months ago.
- The company stated the results reflected the macroeconomic change, as its CEO Vlad Tenev said that perhaps for the first time, its customers are experiencing the opposite of “low interest rates, low inflation, and rising markets.”
- The frenetic trading activities derived from meme stocks, including GameStop and AMC Entertainment, and the king of meme coin – Dogecoin – accounted for a significant portion of the company’s revenue last year.
- As the market environment has changed in the past 12 months, with growth stocks and cryptocurrencies under pressure, the millennials-favorite trading firm has experienced difficulties gaining confidence from investors.
- Though vowing to focus on “long-term growth,” as indicated in the report, the company days ago announced to cut 9% of its full-time employees – a red flag as interpreted by Wall Street.
- At the time of writing, the company’s stock HOOD bounced from the outrageous fall during the pre-market hours, trading slightly above $10.00.