Key Takeaways
Robinhood Markets Inc. (HOOD), the brokerage fashionable with younger retail buyers, in all probability misplaced 13 cents a share within the third quarter, marking its seventh straight quarterly deficit as shoppers avoid buying and selling amid a bear market in shares and cryptocurrencies, in accordance with estimates from Seen Alpha. Nonetheless, if income drops simply 3%, as analysts count on, it might be a step up from declines of greater than 40% on a 12 months over 12 months foundation within the 12 months’s first two quarters.
Nonetheless, the variety of month-to-month lively customers (MAU), a measure of Robinhood’s engaged consumer base, is predicted to slip to 13.7 million, a few third lower than the height of 21.3 million within the second quarter of final 12 months. The corporate had 13.3 million customers in August and 13.2 million in July.
Robinhood did get some welcome information in September, when Bloomberg reported that the Securities and Trade Fee (SEC) determined that it would not ban the follow of cost for order circulation, as SEC chair Gary Gensler had instructed it would. The follow is essential to Robinhood’s working mannequin, because the dealer affords its shoppers no-fee trades so it may well funnel them for execution to the market-makers who pay Robinhood for the order circulation.
Whereas the SEC might have determined towards an outright ban, it is nonetheless mulling guidelines that would undermine the worth of Robinhood’s order flows, together with one requiring execution at or above the midpoint of the bid-ask unfold for commerce orders from retail buyers.
Robinhood’s buyers are buying and selling far lower than they did a 12 months in the past, in accordance with month-to-month statistics launched by the corporate. Each day common income trades in equities had been down 25% 12 months over 12 months in August, whereas notional buying and selling quantity was down a extra modest 10%.
The corporate is benefiting from rising rates of interest by charging its prospects larger charges on their margin balances. Internet curiosity revenue elevated 35% sequentially to $74 million within the second quarter, accounting for 23% of web income.
Robinhood’s share value is down 33% in 2022, however it’s up 73% from its mid-June low.
Supply: TradingView
Robinhood Earnings Historical past
In August, the corporate reported a smaller Q2 loss than analysts anticipated, whereas income and MAU fell wanting estimates. The inventory gained practically 12% the following day.
The Q1 report in late April wasn’t as nicely acquired, leaving the share value 2.8% decrease within the subsequent buying and selling session. Robinhood’s loss was deeper than the consensus estimate, whereas income and MAU additionally upset.