Robinhood’s Q3 Earnings and Future Prospects
Robinhood, a key player in the 2021 retail trading frenzy, allowed small-scale investors to invest in “meme stocks” during the pandemic. However, the firm experienced a 6% drop in shares after Q3 earnings report and an overall 55% drop from the last quarter. While earnings per share exceeded expectations by 1 cent, revenue fell short of Wall Street estimates by 2.4%. Monthly active users also declined by 16% to 10.3 million.
Co-founder Baiju Bhatt sold around 20% of his stake in October, but Robinhood remains optimistic about its future. The company plans to expand its brokerage operations to the UK and introduce cryptocurrency trading in the EU. It has also extended its services, offering 24-hour trading for 95 stocks and a 1% match for IRA deposits.
Chief Financial Officer Jason Warnick said Robinhood needs crypto regulation “to innovate even faster.” In line with SEC’s regulation, Rohinhood recently removed Jump Trading from its token list.
Q3 Earnings: A Sinking Mode?
In Q3 2023, Robinhood reported a 29% YoY increase in total net revenues, reaching $467 million. Net interest revenues saw a 96% YoY increase to $251 million. However, transaction-based revenues decreased by 11% YoY to $185 million. The company reported a net loss of $85 million.
Non-GAAP Showing Some Hope
Adjusted EBITDA (non-GAAP) surged by 191% YoY to $137 million. Net Cumulative Funded Accounts grew by 360 thousand YoY to reach 23.3 million. Assets Under Custody (AUC) increased 34% YoY to $87 billion, driven by continued Net Deposits and higher equity valuations.
Hot Take: Is Robinhood in Trouble?
While Robinhood’s Q3 earnings showed losses and a decline in monthly active users, the company remains focused on expanding its market presence and providing industry-leading products despite regulatory challenges and changes in the market landscape.
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