UPDATED 20:35 EST / OCTOBER 26 2021

APPS

Robinhood’s shares plunge after it misses earnings forecasts

Shares in Robinhood Markets Inc. plunged after the bell today after the company missed forecasts on revenue and earnings in its third-quarter earnings report.

For the quarter ended Sept. 30, Robinhood reported revenue rose 35% from a year ago, to $365 million, but that was significantly down from $565 million in the previous quarter. Analysts had been predicting revenue of $431.5 million.

The company’s net loss in the quarter came to $1.32 billion, or $2.06 per share, compared with a loss of $11 million in the third quarter of 2020. Analysts had been expecting a loss of $1.37 per share.

The shift in Robinhood’s fortunes came through a significant drop in cryptocurrency trading, which had hit a record high in the previous quarter. Overall transaction revenue in the quarter came in at $267 million, with only $51 million coming from cryptocurrency trading. Robinhood had seen $233 million in revenue from crypto trading in the previous quarter, driven strongly by interest in Dogecoin.

Robinhood’s monthly active users in the quarter rose 76% year-over-year, to 18.9 million, but that was down from 21.3 million in the previous quarter. The average revenue per user fell 36%, to $65, compared with $102 in the third quarter of 2020.

Highlights in the quarter included the company launching 24/7 live phone support and multiple improvements to its crypto platform. Robinhood’s Snacks newsletter also grew to 23.3 million unique readers in the quarter.

“Q2 was kind of one of those idiosyncratic market events where there’s this massive interest specifically in Doge,” Robinhood Chief Financial Officer 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.”

Looking forward, Robinhood warned that its business is affected by many factors, including seasonality, general market conditions and retail trading behavior. The company said it anticipates that many of the same factors that affected its third-quarter results will do the same in the next quarter.

For its fourth quarter, Robinhood said it expects revenue of no greater than $325 million and full-year revenue of less than $1.8 billion.

Investors were not happy. Robinhood’s share price fell more than 8% in after-hours trading, to $36.22 as of 8 p.m. EDT. That’s the lowest price at which Robinhood shares had traded since two days after its initial public offering in July.

Photo: Robinhood

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