Robinhood Shares Fall as Revenue Comes in Way Under Estimates

Trading platform Robinhood saw its shares sink on Tuesday after the company reported Q3 revenues that fell way short of expectations due to lighter crypto trading.

Shares fell about 8% in after-hours trading.

For the third quarter, transaction-based revenue was $267 million, with only $51 million from cryptocurrency trading. Revenue from crypto trading had reached $233 million in the second quarter in comparison.

The company also warned that barring any change in the market environment, the headwinds that dragged down last quarter — like lower retail trading activity — will persist into year-end.

For the third quarter, total net revenue for the company came in at $365 million, missing a Refinitiv estimate of $431.5 million. Revenues grew 35% year over year but were well below the second quarter’s revenue of $565 million.

Robinhood reported a net loss of $1.32 billion, or $2.06 per share. Wall Street was expecting a loss of $1.37 per share, according to Refinitiv.

“Q2 was kind of one of those idiosyncratic market events where there’s this massive interest specifically in doge,” Robinhood CFO Jason Warnick told CNBC.

“We love it when those moments happen. It’s a great way to bring a lot of new customers onto the platform. But we’re really thinking about investing in crypto over the long term. And so it’s you know, frankly, it’s gonna be impossible for us to accurately predict … revenue on a quarter-to-quarter basis.”

Options trading brought in $164 million, and equities trading added $50 million to transaction-based revenue.

Average revenue per user dropped by 36% to $65 year over year from $102.

“This quarter was about developing more products and services for our customers, including crypto wallets,” said Vlad Tenev, CEO and co-founder of Robinhood Markets. “More than one million people have joined our crypto wallets waitlist to date.”

Looking forward the company expects fourth-quarter revenue no greater than $325 million. The company sees account growth in line with the 660,000 opened in the third quarter of 2021.

“For the three months ending December 31, 2021, we anticipate that many of the factors that impacted our third-quarter results, such as seasonal headwinds and lower retail trading activity, may persist,” the company said.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.