Robinhood Markets Inc.
swung wildly Friday, in the future after the brokerage reported a lack of $423 million for the fourth quarter.
The corporate’s inventory worth fell 14% at first of the session, dropping beneath $10 throughout intraday buying and selling for the primary time, earlier than turning constructive. The inventory completed up about 9.7%, settling at $12.73. It’s down 28% in 2022.
The unstable session got here after the corporate’s fourth-quarter outcomes missed analysts’ expectations. The brokerage, utilized by particular person traders, recorded income of $363 million for the October-through-December interval, a rise of 14%. Analysts polled by FactSet anticipated quarterly income of $376 million and a internet lack of $225 million.
For the yr, Robinhood recorded an 89% bounce in income to $1.82 billion, in contrast with $959 million the earlier yr. Its internet loss totaled $3.7 billion for the yr.
The corporate had a rise in know-how and administrative bills that ate into its outcomes.
Income tied to choices and cryptocurrency buying and selling picked up within the newest quarter from a yr earlier, reflecting particular person traders’ willingness to dabble in riskier and extra speculative buying and selling methods in 2021. Income tied to clients’ choices buying and selling rose 14% to $163 million.
The corporate mentioned fourth-quarter income tied to inventory buying and selling fell 35% to $52 million from $80 million in the identical quarter of 2020, the interval earlier than particular person traders stormed the markets in January 2021 to wage a guerrilla-style warfare in opposition to hedge funds.
Robinhood turned a darling of the Covid-19 period, as thousands and thousands of recent traders started making an attempt their hand at buying and selling. The brokerage now has 22.7 million clients with funded accounts, it mentioned Thursday, up from 12.5 million in 2020.
The corporate faces stiff competitors. Bigger asset managers comparable to Constancy Investments and
have used their measurement to extend income even whereas slicing charges. They’ve additionally centered on including merchandise with greater charges.
Robinhood began the primary half of 2021 in a powerful place as thousands and thousands of traders entered the market to commerce meme shares comparable to
and cryptocurrencies comparable to dogecoin. But because the yr went on, it was onerous to maintain the momentum. The corporate has skilled a slowdown in income tied to clients’ buying and selling. Income tied to cryptocurrency buying and selling was significantly onerous hit within the third quarter. That development continued within the fourth quarter, with income tied to cryptocurrency buying and selling falling roughly 5.9% in contrast with the July-through-September interval.
The brand new yr hasn’t offered aid, with buying and selling persevering with to fall, the corporate mentioned.
Robinhood mentioned it anticipated first-quarter income of lower than $340 million, a quantity that will symbolize a 35% year-over-year decline.
Robinhood’s chief monetary officer, mentioned in a name with the media that buying and selling exercise has picked up in current days.
Mr. Warnick mentioned the corporate is planning to roll out merchandise that concentrate on longer-term investing. He mentioned that the corporate expects to start introducing tax-advantaged retirement accounts midyear and that there’s a possibility to broaden internationally—significantly within the cryptocurrency house.
The corporate this month began rolling out cryptocurrency wallets to some clients, he mentioned. The transfer permits these clients to maneuver their crypto holdings out and in of the Robinhood app.
Robinhood’s inventory has been punished currently as traders rotate out of development firms that had been standard final yr. Robinhood has misplaced about 67% from its preliminary public providing worth of $38 a share.
Write to Caitlin McCabe at [email protected]
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Appeared within the January 28, 2022, print version as ‘Robinhood Posts Loss, Sending Inventory Into Nostril-Dive.’