What was believed to be one of the best years for Robinhood seems to end in complete disappointment. Yesterday Robinhood released a rather disappointing earnings report and it caused stocks to drop about 10%, is cryptocurrency to blame?
Robinhood did not have the year he expected
After an extraordinary start to the year, Robinhood’s crypto-related revenue fell sharply.
The reason? The cryptocurrency environment has stabilized to some extent and this led to a reduction in users on the platform, especially a drop in funded accounts.
Thus, according to the report, Robinhood’s revenues associated with cryptocurrencies fell to USD 51 million in the third semester. Recall that, during the second quarter, reported revenue was USD 233 million, a 78% drop.
While, in terms of net income, these were USD 365 million, well below the USD 565 million observed in the second quarter.
In this way, the company’s shares plummeted as market expectations were not met; in fact, the market forecast was for net income to be $ 437.1 million this quarter.
Thus, the company reported an adjusted net loss of $ 2.06 per share, or $ 1.32 billion, while analysts’ expectations was a loss of $ 0.67 per share.
Will it recover during the last trimester?
Robinhood warned that trade headwinds will persist through the end of the year. And, beyond that, they say that the investment manias that Robinhood experiences make the results unpredictable.
In accordance with Barron’sDuring the call, the CEO of the company, Vlad Tenev, explained that “historically, our growth has come in waves.”
It also added that “the surges occurred during periods of increased volatility or market events. We’ve also seen new customers join when we add new products and features, giving us a degree of control over our growth. Looking ahead, we hope these patterns will persist. ‘
They will proceed with caution regarding cryptocurrencies
Additionally, Tenev explained to CNBC that the second quarter was driven by “one of those idiosyncratic market events where there’s massive interest specifically in Doge.” And, as they will continue to invest in cryptocurrencies for the long term, he explained that it is impossible to accurately predict quarterly earnings.
Regarding the future of the relationship between Robinhood and cryptocurrencies, Tenev assured that they will wait for more regulatory clarity before adding more digital currencies to the platform.
We want to know your opinion! Do you think Robinhood will be able to recover? Or, on the contrary, will you have great challenges?