Skip to content
Robinhood shares fall 12% after loss worse than analysts expected

 | Top stories

Robinhood shares fall 12% after loss worse than analysts expected

| Today Headlines | Today Headlines

Robinhood Markets Inc.

HOOD -6.45%

the stock fell 12% post-market after the brokerage reported a fourth-quarter loss of $423 million.

The company experienced an increase in technology and administrative expenses which weighed on its results.

Brokerage used by individual investors recorded revenue of $363 million for the October-December period, an increase of 14%.

For the year, Robinhood reported an 89% increase in revenue to $1.82 billion from $959 million the previous year. The company’s net loss totaled $3.7 billion for the year.

Robinhood’s results missed analysts’ expectations. Analysts polled by FactSet had expected fourth-quarter revenue of $376 million and a net loss of $225 million.

The brokerage in 2021 saw momentum in its options and cryptocurrency trading businesses as individual investors embarked on riskier and more speculative trading strategies. But in the fourth quarter, the company said, revenue from stock trading fell 35% to $52 million from $80 million.

In contrast, client options trading revenue increased 14% to $163 million.

Robinhood has become a darling of the Covid-19 era, as millions of new investors have started trying their hand at trading. The brokerage now has 22.7 million customers, it said Thursday, up from 12.5 million in 2020.

The company faces fierce competition. Asset managers such as Fidelity Investments and BlackRock Inc.

used their scale to increase profits while reducing costs. They also focused on adding products with higher fees.

Robinhood started the first half of 2021 in a strong position as millions of investors entered the market to trade shares of memes such as GameStop Corp.

and cryptocurrencies such as dogecoin. Yet as the year progressed, it was difficult to maintain momentum. The company experienced a revenue slowdown related to customer exchanges. Cryptocurrency trading revenue was hit particularly hard in the third quarter.

The recent surge of Shiba Inu Coin, and the resulting decline in value, is part of a growing trend of meme coins that rival some of the largest digital tokens in the world. WSJ retail investment reporter Caitlin McCabe explains why investors are pouring money into this meme-based cryptocurrency. Photo: Amber Bragdon/Getty Images

The new year did not bring relief as trading continued to decline, the company said.

Robinhood lowered its Q1 revenue forecast to less than $340 million, which at the peak would represent a 35% drop.

Jason Warnick, Robinhood’s chief financial officer, said on a media call that business activity has picked up in recent days.

Mr. Warnick said the company plans to roll out products focused on longer-term investments. He said the company plans to start introducing tax-advantaged retirement accounts mid-year and there is an opportunity to expand internationally, particularly in the cryptocurrency space.

The company began rolling out cryptocurrency wallets this month for select customers, he said. The move allows customers to move their crypto holdings in and out of the Robinhood app.

The shares fell in after-hours trading after ending Thursday at $11.61, down 6.5% from Wednesday’s close. Robinhood shares have been punished lately as investors turn away from the growth companies that were popular last year. Based on Thursday’s close, Robinhood is down 69% from its initial public offering price of $38 per share.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the January 28, 2022 print edition as “Robinhood Posts Loss, Sending Stock Into Nose-Dive”.

Robinhood shares fall 12% after loss worse than analysts expected

| Local Business News News Today
wsj

Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.