Robinhood Markets, Inc
HOOD NASDAQ

HOOD
Robinhood Markets, Inc NASDAQ
 
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History of HOOD

Important events

Sep 092021

Growing the HODL army with auto-renewals

Robinhood is delving further into the world of crypto, bulking up its offerings with a new automatic renewal service.

While Robinhood isn't primarily focused on crypto trading, digital assets brought in 51% more revenue in the second quarter compared to the first, and its latest offering might send that number soaring. The online broker has just introduced crypto recurring investments, which lets you automatically invest in cryptocurrencies on a regular schedule.

The account wont sell any stocks, but is aimed at steadily building your crypto portfolio through the dips and lifts. There are already a massive number of HODLers out there, and it looks like there’s about to be a whole lot more.
Image: Know Your Meme
Sep 072021

Cathie Wood calls the SEC's bluff

Famed stock-picker Cathie Wood says Robinhood’s payment processes are too good to actually change much.

The SEC continues to come at Robinhood and its payment-for-order flow, which is its primary source of revenue in lieu of taking commissions on trades. The brokerage recently spoke out against the “draconian” idea of banning the system, and Ark Invest’s Cathie Wood called the SEC's bluff this week by pointing out that the processes are just too beneficial for all sides to actually do much about:

We're looking at the payment-for-order flow controversy, we know that Chairman Gensler at the SEC is looking at that. That's a large percentage of Robinhood's revenues. But we actually think that not much is going to change there, because the system has been so good from an execution point of view for the end investor. So we'd be surprised to see a lot change on that front.
Sep 062021

Robinhood speaks out against “draconian” SEC

Robinhood is looking at taking legal action against the Securities and Exchange Commission (SEC), calling the whole thing “pretty draconian” after its chairman made it clear that banning its payments processes is still on the cards.

Last week, SEC head Gary Gensler warned that the SEC is still contemplating a ban on Robinhood’s payment for order flow (PFOF) practices, which are its primary source of revenue in lieu of taking commissions on trades. Robinhood will certainly take a hit if the process is banned, and says it would go so far as to sue the regulatory agency if the ban goes ahead. Robinhood's chief legal officer Dan Gallagher said:

The idea of banning payment for order flow is pretty draconian. This is the revenue that provided us the ability to offer commission-free trading with no minimum balance, abandoning it would be such a negative thing for retail investors. We'd have to get in line, there would be a long line of folks that would sue.


Around 80% of Robinhood's second quarter revenue was derived from the PFOF practice, and prices have lost nearly 7% since Gensler made his remarks on August 30.
Sep 032021

Early payday from Robinhood

As a way to expand its platform beyond the world of trading, Robinhood is developing a feature that could help users get their paycheck two days early.

Robinhood is stepping up its game and taking on companies like PayPal (PYPL) with the development of a new Early Direct Deposit feature. The service will let users get their paychecks directly into their Robinhood accounts up to two days early, which also provides an easy way for people to put all of their earnings into stocks on the platform. Other payments companies like PayPal (PYPL) and Capital One (COF) already offer the service. Robinhood emphasized its plans to expand its product offerings in its Q2 earnings call:

We want to be the single place that our customers go to for all things money.
Tech Daily / Unsplash
Aug 312021
🗡

SEC sword still hanging over Robinhood's PFOF practices

Robinhood investors have a moody Monday, sending shares down 7% as the Head of the Securities and Exchange Commission (SEC) warns that banning the brokerage’s main revenue stream could still be a possibility.

Shares of recently public online brokerage Robinhood sank 6.89% on Monday as the SEC continues to contemplate a ban on the company’s payment for order flow (PFOF) practices, which is its primary source of revenue in lieu of taking commissions on trades. Only a few weeks ago, investors thought they had dodged a bullet when the SEC supposedly shelved the piece of legislation that was looking to ban PFOF practices (which let brokers sell their customers’ buy and sell orders to market makers like Citadel or UBS, rerouting trades to them and taking the cost away from the trader.

In the first quarter of the year, PFOF practices were responsible for 81% of Robinhood’s revenue, and its no-commission model is one of the platform’s biggest draws when compared to other competitors because it allows for a more accessible market – which is part of the company’s core ethos. The SEC had flagged the process however, raising concerns that it makes customers vulnerable, with no guarantees that they would get the best price execution from the brokerage.

And as it turns out, the legislation is still very much on the table, according to SEC head Gary Gensler:

They get the data, they get the first look, they get to match off buyers and sellers out of that order flow. That may not be the most efficient markets for the 2020s. I’m raising this because it’s on the table. This is very clear.

To add insult to injury, PayPal (PYPL) might be encroaching on Robinhood’s market soon with its own trading offerings. Prices ended the day at $43.64, down from its post IPO Reddit-fuelled peak of $85.
Aug 272021
🦈

Regulatory sharks are circling

Robinhood is in hot water with companies and financial regulators for its free stock program.

Robinhood is facing a potential investigation into its free stock program, which gives away free stocks to new users on its brokerage app and existing users who recommend a friend. In 2020, the popular brokers gave away $78 million in free shares – which is great for new retail investors, but it comes at a price for the companies behind the stocks, who are kicking up a fuss over the practice and attracting the attention of regulators. The offerings come with a whole bunch of documentation and companies are footing the bill for all this admin. Catalyst Pharmaceuticals, who picked up the first pitchfork, claims to have lost over $200,000 last year to the cost of the numerous contracts. Another company, Marathon Oil, said that the cost of proxy statement distributions has increased 25-fold since 2019 as Robinhood has added significantly to its user base. Catalyst Chief Executive Patrick McEnany wrote in a June comment letter to the Securities and Exchange Commission (SEC):

Catalyst has become aware that Robinhood has been giving away shares of Catalyst’s common stock at no charge as part of its promotional program. Catalyst believes that there are likely numerous companies facing this same issue, and that the costs of distributing materials to small stockholders under these circumstances is onerous and unreasonable.


The SEC this month allowed the New York Stock Exchange (NYSE) to ban brokers from asking for reimbursement for any shares they give away for free. Robinhood isn't a part of the NYSE, so the new rule doesn't impact it yet, but regulators are looking at making it an industry wide standard.

Prices ended Thursday down 4.33%.
Aug 232021

Robinhood’s woeful weekend

Robinhood investors had a woeful weekend after the stock lost just under 15% at the end of last week after its mixed second quarter earnings.

Popular online brokerage reported its first earnings as a public company after the bell on Thursday, doubling its revenue for the quarter but disappointing investors with predictions of a slowdown in retail trading activity in the next quarter. Robinhood reported a loss per share of $2.16 on revenue of $565 million, which was up 131% from the same period last year and at the high end of the company’s forecast of $546 million to $574 million. Despite impressive revenue numbers, the mood was brought down by a warning that Q3 is expected to see a big slow down in trading activity. Retail trading has been a driving force of the pandemic-era market mania, but as the economy reopens and restrictions are lifted, Robinhood is expecting retail interest to take a dive, which is likely to impact the top and bottom lines for the third quarter.

Prices plummeted over 10% on Thursday, continuing its losses by another 5% loss going into the weekend. However, the brokerage seems to already have an action plan in place, giving away $100,000 to recruit new investors to its platform – Robinhood will give $500 away to 200 users to either join or refer friends to the trading site.
Aug 192021

Q2 comes good for Robinhood, but can it last?

Robinhood releases its first earnings report since listing in June, doubling its revenue for the quarter but disappointing investors with predictions of a slowdown in retail trading activity.

Shares of popular online brokerage Robinhood closed up 6.71% on Wednesday but fell in after-hours trading, on the back of a mixed second quarter earnings report. The newly public company reported a loss per share of $2.16 on revenue of $565 million, which was up 131% from the same period last year and at the high end of the company’s forecast of $546 million to $574 million. Analyst expectations were varied considering how new Robinhood is, but a bigger net loss than expected overshadowed excitement over the fact that revenue came in far above the initial expectations of $521 million.

Transaction volumes jumped 141% to $451 million, boosted by a surge in crypto trading on the platform (up from $5 million in Q2 2020 to $233 million in 2021). The company also noted that for the first time ever, more new customers were making their first trades in crypto instead of stocks. Interestingly, joke meme coin Dogecoin (DOGEUSD) was responsible for much of that uptick, accounting for more than 62% of crypto trading by volume for Robinhood in the second quarter.

The firm more than doubled its monthly active users to 21.3 million, but the mood was brought down by a warning that Q3 is expected to see a big slow down in trading activity. Retail trading has been a driving force of the pandemic-era market mania, but as the economy reopens and restrictions are lifted, Robinhood is expecting retail interest to take a dive, which is likely to impact the top and bottom lines for the third quarter. The company said:

For the three months ended September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenue and considerably fewer new funded accounts than in the prior quarter.

David Trainer, Chief Executive Officer of investment research firm New Constructs added his two cents:

We aren't talking about people who are investors at all but gamblers and now that we've got sports back? Betting on sports is a lot more fun than betting on the stock market.
Aug 162021
🏛

Robinhood finally breaks out of the dip

After spending the week in the red, newly public Robinhood gains 5.4% after Congress shelves plans to go after its “Payment for Order Flow” sales tactics.

Robinhood has seen some serious highs and lows since its IPO on July 29, opening at $38 and reaching a peak of $85 on August 4, before tumbling back down as the wave of online attention ebbed away. Prices have spent every day since then in the red, sinking back down to $48 on Thursday, before catching a break from Congress. The online brokerage dodged a bullet on Thursday when the political body shelved a piece of legislation that was looking to ban “payment for order flow” (PFOF) practices, which is basically how commission-free trading platforms like Robinhood make money.

PFOF practices let brokers sell their customers’ buy and sell orders to market makers like Citadel or UBS, rerouting trades to them and taking the cost away from the trader, but the SEC flagged the process and said that it makes customers vulnerable to the brokerage, with no guarantees that customers will get the best price execution. In the first quarter of the year, PFOF practices were responsible for 81% of Robinhood’s revenue, and its no-commission model is one of the platform’s biggest draws when compared to other competitors because it allows for a more accessible market – which is part of the company’s core ethos.

Robinhood ended Friday up 5.26% at $50.63, still a solid 33% from its IPO price but down 40% from its August 4 reddit-rally high.
Aug 112021

Robinhood woos retail investors with first ever acquisition

In its first acquisition since it listed last month, Robinhood inks a deal to acquire Say Technologies for $140 million: yet another sign of its growing ambition.

Brokerage app Robinhood has been on a crazy ride since its IPO two weeks ago, crashing on the day before the online army took the stock under its wing and sent prices soaring over 100% in just a few days. One of the most controversial aspects of Robinhood’s IPO was the allocation of 35% its 55 million shares exclusively for its own customers, in what it claimed to be one of the biggest-ever retail allocations in an IPO, and now the brokerage is committing further to its loyal army of retail traders with its first acquisition as a public company.

The consumer investing and trading platform will acquire Say Technologies, a venture-backed start-up that provides a communication platform whereby shareholders are able to take part in proxy voting. Robinhood will pay $140 million in an all-cash deal, and the technology will let investors view documents, provide feedback, ask management any questions they have, and vote. Some companies are already including retail questions in their earnings calls, but Robinhood plans to take it to the next level, encouraging its massive pool of smaller retail investors to participate as much as possible. Say Technologies was built on the idea that Wall Street insiders aren’t the only ones who should have access to financial markets, so in theory, it’s a match made in heaven.

Together, we’ll find new ways to expand what it means to be an investor through new products and experiences that democratize shareholder access,

Robinhood said in a blog post.

Investors are holding out on celebrating though, and prices lost 3.76% to close at $51.91 on Tuesday, up 36% from the IPO price of $38.
Aug 062021

Robinhood: The chaos continues

After its lackluster debut, Robinhood has been on one hell of a ride this week, hitting highs of $85 and lows of $35.50 all in the space of a few days. Despite a big old boost from the online army, Robinhood ends Thursday as TradingView’s top loser, down 28%. Guess popularity isn’t everything.

It’s been a mad week for online brokerage Robinhood, whose hotly anticipated IPO hit the market last week – although things didn't exactly go to plan. Shares closed down over $3 from its $38 IPO price, but on Monday things started to take a turn for the better as the Reddit army rode in on a surge of social media attention to save the day. The stock hovered among the most-mentioned on Reddit’s WallStreetBets throughout the week, and prices soared as much as 143% in three days, closing Wednesday up over 100% for the week.

However, its three-day winning streak came to an end on Thursday after the company registered the sale of up to 97.9 million shares by early investors, adding that it wouldn’t be taking any of the proceeds from the sale. The brokerage outlined the potential for future share sales depending on stock performance in its IPO prospectus, and it’s not unusual for early investors to sell stock in a company after its IPO. Right now it looks like Robinhood still plans to go ahead with the sale, although there’s nothing to suggest that the stockholders will choose to actually sell.

The move wasn’t welcomed by its retail supporters though. Despite the online army pushing prices up to $85 on Thursday, the latest news sent prices tumbling back down to earth, dropping 28%.

However, they still closed on Thursday well above its IPO price at $50.97. So who knows what tomorrow will bring?
Aug 042021

The Power of Love: Robinhood's retail army rides to the rescue

Robinhood may have tanked its IPO, but the online army is nothing if not loyal, and they’ve come riding in on a surge of social media attention to save the day, sending Robinhood stock soaring 24% on Tuesday.

Commission-free trading platform Robinhood made its market debut last Thursday, and things didn’t go quite according to plan. The platform is a fan favorite of retail investors and has been one of the main vehicles of the meme stock madness that took over the market this year. But that didn’t prevent a rocky first day on the market, with the price falling from its $38 debut to close at $34.82, leaving the company with a market cap of around $29 billion – one of the worst IPOs of the year for its size.

But never fear, Robinhood’s loyal army of retail traders has ridden to the rescue. The ticker spent the day at the top of WallStreetBets most-mentioned, and the love sent prices popping to $48.59 before closing at $46.80 on no other apparent news: well above its $38 IPO price. Robinhood received 8,988 buy orders and 7,931 sell orders on Fidelity on Tuesday.

Although we have come to expect 40% surges on the first day of trading, Robinhood talked to a wider swath of investors, including significant retail to push the boundaries on pricing. I believe now, the long-term investors who see the incredible long-term value of Robinhood are moving the stock, as the short-term investors have largely fled the stock,

Greg Martin of Rainmaker Securities said.
Aug 022021
📉

New listing in the (Robin)hood

Robinhood made its market debut on Thursday, but its grand entrance got a chilly reception, marking one of the worst IPOs of the year as it slid over 8%.

Online brokerage Robinhood was hoping to make history with its IPO, and it has, but not for the right reasons. The platform is a fan favourite of retail investors and has been one of the main vehicles of the meme stock madness that took over the market this year. But that didn’t prevent a rocky first day on the market, with the price falling from its $38 debut to close at $34.82, leaving the company with a market cap of around $29 billion – one of the worst IPOs of the year for its size.

Robinhood was founded in 2013 to offer commission-free trading, a first for the industry at that point, paving the way for smaller traders to enter the stock market. The Coronavirus promoted a surge of younger participants on the platform, and its popularity continued to soar in 2021 as retail investors explored the world of meme stocks. The app hit headlines in January as the madness kicked off with Gamestop, and Robinhood found itself in the eye of the storm after halting trading on several meme stocks, which angered a lot of traders, but that hasn't seemed to stop its growing throng of users. The company boasted 22.5 million clients as of the end of June, more than double the same period the year before, and over $100 billion in customer assets.

But Robinhood would be nothing without its loyal army of retail traders, and it knows it. The company took the unusual step of setting aside up to 35% of its 55 million shares exclusively for its own customers, in what it claimed to be one of the biggest-ever retail allocations in an IPO. Normally it's big hedge funds and institutional investors with thick wallets that take the route of buying shares of a company before it debuts, but the online brokerage seemed to think that getting its own investors involved early could be a positive step toward breaking open the world of trading to the everyday man on the street. Not everyone agreed though.

It maybe seemed like a good idea to offer (the IPO) to your customers, but it might not be very helpful when it comes to controlling how the shares are allocated and the beginning of the trading of this IPO.

said Kathleen Smith at Renaissance Capital.

Robinhood priced its shares at $38 each on Thursday, at the lower end of its $38 to $42 range, which would have given it a valuation of around $32 billion. The market had different ideas though, and after briefly popping to $40 the stock closed down over 8%. The company also has regulatory worries to contend with – only a few days before its IPO, it was revealed that CEO Vlad Tenev was under fire for not being registered with the Financial Industry Regulatory Authority (FINRA), and the SEC is reviewing Robinhood’s payment for order flow system, which was responsible for around 80% of its first quarter revenue.