Robinhood shares fall as trading volumes drop, company seeks growth in Europe
Shares of Robinhood fell Wednesday after the retail brokerage reported a drop in trading volumes in the last quarter and said it’s looking to expand growth in Europe.
The stock was last down more than 12%, with shares gaining nearly 20% year to date.
Robinhood also reported fewer monthly active users, which fell 16% to 10.3 million in the third quarter from the same period last year. Although third-quarter revenue rose 29% to $467 million, it fell short of the $480 million analysts were predicting. Its net loss narrowed to $85 million, or 9 cents a share, and topped Wall Street’s expectations.
Revenue was hurt by a 13% decline in third-quarter transaction revenue tied to stock trading, compared with the same period last year. Crypto trading dropped 55% year-over-year, while options trading was unchanged. That translated to an overall decline of 11% in its transaction-based revenue.
“Over the past year, we’ve put a lot more value in products like Robinhood Gold including a 4.9% annual yield on cash and a 3% match on IRA contributions,” Robinhood CEO Vlad Tenev said in the earnings release. “Looking ahead, we remain focused on providing industry-leading products that serve far more of customers’ financial needs, gaining market share, expanding internationally, and continuing to change the industry for the better.”
The company is also seeking growth opportunities in Europe, with plans to soon launch its brokerage in the U.K. and open crypto trading to its E.U. customers.
The drop in trading coincides with rising treasury yields that have been weighing on equities, while cryptocurrencies have held on to recent gains after a big rally at the end of October but trading across the market has been stagnant since about May.
“Similarly, cryptocurrencies have held on to recent gains after a big rally at the end of October, but trading across the market has been stagnant since about May. At the end of August, bitcoin trading volume hit its lowest level in more than four years, according to CryptoQuant, as investors waited for reasons to jump back into a market hampered by regulatory uncertainty.”
Overall, Robinhood’s earnings report highlights the challenges facing the company amid changing market conditions but also outlines its strategy for future growth and expansion.