Thursday, May 19, 2022

Robinhood shares recover sharp losses after posting an earnings flop

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Shares of Robinhood fell sharply early on Friday after announcing a drop in earnings, signaling a drop in the number of users – but in mid-morning the stock fell to a low and rose more than 3% as traders entered.

However, stocks that have fallen since the beginning of 2022 have fallen by almost 35 per cent, and even more over the past year – by 65 per cent – a testament to how out of fashion the platform has caused meme exchanges to intensify. to be

“Robinhode was one of the favorites of the pandemic,” said Art Hogan, chief market strategist at National Securities in New York. “Almost exactly a year ago, he was sitting in the center of mem stock mania. And as we entered the new year, it clearly cooled. ”

The earnings report emerged in recent days as both cryptocurrencies and stocks have been minted: Bitcoin fell 50% last week and the S&P 500 has fallen more than 10% so far this year.

Robinhood shares have fallen since the company went public in the summer.

Robinhood reported a loss of $ 423 million in the fourth quarter at the end of Thursday compared to the same period last year. Its price has also doubled. However, the number of active users has also decreased – another warning sign for the online broker.

“His popularity seems to be declining,” Hogan said.

Robinhood shares fell sharply on Friday – from $ 11.61 to $ 9.97 per share in the first minutes of trading. As lunchtime approached, the stock changed and rose more than 3% to $ 12.14 per share.

robinlik
According to market analyst Art Hogan, Robinhood’s “revenue growth is being followed by a decline in popularity.”

According to FactSet, analysts forecast revenue of $ 376 million and net loss of $ 225 million in the fourth quarter.

As the number of monthly active users decreases, the company’s growth prospects look bleak. There were 18.9 million monthly active users in the third quarter – down from 17.3 million in the fourth quarter.

Robinhood, known for its role in the Reddit Rally retail phenomenon, sold for $ 38 a share in July. But since then, 85% have had a nose dive.

vlad tenev
As the number of monthly active users decreases, Robinhood’s growth prospects look bleak.

Mem promotions like GameStop and AMC, which helped boost Robinhood’s reputation, have fallen in recent days as promotions went out of fashion a year after the mAcesparksess began.

Robinhood also faces a number of potential regulatory challenges.

CEO Vlad Tenev was called to testify before Congress in February over the company’s controversial decision to stop trading shares popular in the Reddit Rally crowd, such as GameStop and AMC, which raised questions about its business model.

President Biden’s SEC chief, Gary Gensler, has promised the company will review the practice of selling customer order flows to high-speed trading firms such as Citadel Securities.

“There are costs,” Gensler said of Robinhood’s unpaid sales model. “Costs are low on the surface.”

With post wires

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