Robinhood shares fall after retail broker posts drop in revenue, users

Shares in Robinhood Markets Inc, the brokerage at the center of last year’s retail trading frenzy, slipped to a record low on Thursday after it posted a 43 percent fall in first-quarter revenue and a decline in monthly active users.

Shares of the Menlo Park, California-based firm dropped more than 12 percent to $8.83 in extended trading following the results. The shares, which have lost more than 43 percent of their market value so far this year, were sold in its IPO last July for $38 apiece.

“For most of our history, Robinhood has operated in a period of low interest rates, low inflation and rising markets. Our customers are now experiencing all three of these trends going in the opposite direction, perhaps for the first time in their lives,” said Robinhood Chief Executive Officer Vlad Tenev on a call with analysts.

Trading volumes have eased from last year’s frenetic pace when retail investors used the platform to pump money into shares of so-called meme stocks including GameStop and AMC Entertainment.

Robinhood said on Tuesday it was laying off about 9 percent of its full-time employees, adding rapid headcount growth had led to some duplicate roles and job functions.

“We’re moving back to being a more lean company with a leaner operating model, starting with the reduction in force that we announced earlier this week,” said Chief Financial Officer Jason Warnick on a call with reporters.

High-growth technology stocks have come under pressure this year as the poor performance of shares and falling analyst confidence sours investor sentiment.

Common with other high-growth tech firms, Robinhood has yet to turn a profit since its market debut. The company reported a net loss of $392 million or $0.45 per share in the three months ended March. A year earlier, which was before its IPO, it company posted net loss of $1.4 billion or $6.26 per share.

Analysts on average had expected a net loss of $0.36 per share, according to IBES data from Refinitiv.

Total net revenues decreased to $299 million, compared with $522 million a year earlier.

Robinhood’s monthly active users fell 10 percent to 15.9 million for March 2022, compared with 17.7 million for March 2021. The company attributed the decline to users with lower balances.

Transaction-based revenue from cryptocurrencies, which has been a boon for Robinhood in previous quarters, fell 39 percent to $54 million.

(Reuters)