Robinhood left by fans of crypto and meme stocks
Robinhood (Hood) – Robinhood Markets, Inc. Get the Class A report, the fashionable brokerage in 2021 now seems to be its own ghost.
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And things will not change.
Fintech has just released its first quarter results and this is in stark contrast to the best performance achieved in the same period in 2021. Revenue fell 43% to 299 million units in the first quarter from a year earlier. The decline was due to a 48% to $ 218 million drop in revenue generated by transactions by Robinhood customers, the company said in a statement.
In one year, the share of trading has gone up from 80.46% to 72.9% of revenue. These data indicate that the volume of trade through Robinhood has decreased significantly. In detail, transactions related to options trading declined by 36% to $ 127 million in one year. This was followed by a massacre of crypto and equity-related operations that contributed to Robinhood’s rise to prominence.
Compared to the first quarter of 2021, crypto trading revenue fell 39% to $ 54 million. Equity trading revenue fell 73% year on year to 36 36 million.
A sharp decline in active users
Robinhood meme became hugely popular among retail investors buying and selling stocks and cryptocurrencies, after the impact of COVID-19, forcing governments to open up trillions of dollars in cash aid to unemployed and struggling businesses.
But after the reopening of many countries, the money has dried up as economic and financial incentives have run out. The Federal Reserve began raising interest rates last month and expects further growth.
The trading app was also popular as Gen Zs took its first step in finance. These young merchants especially Gamestop (GME) – Get Gamestop Corporation Class A Report and AMC Entertainment (AMC) – Get AMC Entertainment Holdings, Inc. Meme stocks like Class A reports came together to support outdated business models. These same traders contributed to the excitement surrounding crypto, such as Bitcoin and Etherium, which reached an all-time high last November.
One of the most worrying symptoms now with Robinhood is the sharp decline in active users recorded by Robinhood. Monthly active users (MAU) fell 10% to 15.9 million in the first quarter, the company said. The firm reported 17.7 million MAUs in the first three months of 2021, “During this time we experienced higher trading volume and account sign-ups as well as higher market volatility, especially in some areas.”
The decline is also quarter to quarter. In fact, on a sequential basis, MAU decreased by 8% compared to 17.3 million in December 2021.
Robinhood said the “gradual decline was mainly due to low balance users, who are less engaged in the current market environment.”
Difficult environment
Thus, compared to $ 137 in the first quarter of 2021, the average revenue per user (ARPU) dropped dramatically from 62% to 53%. On a sequential basis, ARPU fell 18% to $ 64 in the fourth quarter of 2021.
“Less was mainly due to lower transaction-based revenue due to the current market environment, which had a negative impact on the number of traders and fictitious trading volumes across all asset classes,” the company explained.
Robinhood’s quarterly performance has raised concerns about Robinhood’s short-term future. Shares fell 11.40% to 8.94 after the close. The company created an IPO on Wall Street last July with a market capitalization of about $ 32 billion at $ 38 per share. The stock has lost 76.5% of its market cap or more than 24 billion.
Brokerage to bear the brunt of retail slump: The company said this week that it plans to lay off 10% of its employees. But despite rumors about his future, he does not give up.
Jason Warnick, chief financial officer at Robinhood Markets, said: “We see our customers affected by the macroeconomic environment, which is reflected in our results this quarter.” “At the same time, we have made progress in our long-term plans and continue to pursue them aggressively.”
The trading app disrupted the entire brokerage industry by cutting fees – eventually forcing big competitors to follow suit. A number of initiatives are being taken to try to regain the momentum of 2021.
The brokerage recently decided to integrate four cryptocurrencies into assets for trading on its platform. In addition to these new assets, Robinhood has recently made a move to attract retail investors behind the rise in crypto prices in 2021. The brokerage will bring crypto wallets to 2 million customers. This wallet allows users to trade crypto outside of Robinhood.
The company has also acquired British crypto firm Ziglu, which enables UK-based customers to buy and sell 11 cryptocurrencies, generate revenue through Boost products, pay using debit cards and even move and spend money overseas without charge. Firm
