It sure has been a busy day here in the business mines with countless companies reporting their earnings results. One company of note is Robinhood. The company has found itself at the center of the meme stock revolution and it hasn't been going so well for the custodian of assets. Robinhood reported Q3 2021 revenues of $365 million (versus expectations of $423 million) and a loss of $2.06/share (with Wall Street expecting a smaller loss of $1.37/share).
Robinhood has found itself in the crosshairs of Congress and the SEC with their entire payment-for-order-flow (PFOF) business model being called into question. Robinhood is certainly doing their best to make some money before the regulatory hammer finally comes down on the company, but they have yet to impress Wall Street with their results. Last quarter, the company was helped out by massive amounts of trading in Dogecoin. The company said that crypto activity declined in Q3 2021, "leading to considerably fewer new funded accounts."
The troubles for Robinhood are not just sequential from the last quarter it seems, as the company also disclosed that Average Revenues Per User (ARPU) was down 36% from Q3 2020. The net loss of $1.32 billion ($2.06/share) was also materially worse than Q3 2020's loss of $11 million. On the brighter side of the results for the company, total net revenues grew 35% to $350 million in the quarter, and the company saw a similar increase in transaction-based revenues.
Here's what Robinhood had to say about their outlook for the rest of 2021:
Things do not appear to be going great over at Robinhood. It is surprising that anyone would keep their money with this company after they betrayed their clients trust in January 2021 when they shut off the Buy Button on several meme stocks. This was not done to protect investors, but was instead the result of horrible risk management at the company. It is hard to understand why anyone would want to invest in a financial services company that is universally hated by Wall Street and individual investors, but it is 2021 and people are dumb enough to buy stocks like DWAC and PHUN.
Robinhood (HOOD) stock was down nearly 10% on today's news and is currently trading below its IPO price. What do you think of the company? Is this the buying opportunity you have been waiting for? Is the stock market a rigged game full of traps? Let us know your thoughts in the Shacknews Chatty comments thread below. We really want to hear your opinion.
This article is only meant for educational purposes, and should not be taken as investment advice. Please consider your own investment time horizon, risk tolerance, and consult with a financial advisor before acting on this information.