Robinhood Markets, Inc

HOODNASDAQ
HOOD
Robinhood Markets, IncNASDAQ
 
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History of HOOD

Important events

Nov 102022

Caught in the crossfire

The FTX disaster has acted as an arrow straight to the heart of Robinhood as crypto-linked equities see $10bn in value wiped off.

  • Shares in Robinhood are down more than 30% this week, largely because of the fallout from the troubled crypto exchange FTX. CEO of FTX, Sam Bankman-Fried, acquired a 7.6% stake in the platform in May and has since seen a 94% wipeout of his personal wealth. Investors are probably anticipating a dump of his shares.
  • Making matters worse, Cathie Wood’s Ark Invest recently dumped 1m HOOD shares worth almost $10m, in favor of Coinbase shares worth $21m. Robinhood’s not alone in feeling the heat however, with crypto-related stocks like Microstrategy and Riot Blockchain down 38% and 15% this week respectively.
  • The downfall of exchange giant FTX is a stark reminder that the bear market can affect even the largest players in the space, and that in crypto there’s no such thing as “too big to fail.” And with Binance now pulling out of its deal to acquire the exchange, this might only be the beginning.
Possessed Photography / Unsplash

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Nov 032022

Robinhood out of the woods?

Robinhood’s come through with an earnings beat, despite some concerning metrics about the platform’s user base.

  • Robinhood beat both earnings and revenue estimates for Q3 2022, with a little help from rising interest rates. The company reported revenue of $361m compared to analyst predictions of $357.7m, causing shares to rise 4% in after-hours trading.
  • The company’s also been making efforts to reduce its costs this year, letting go of 23% of its workforce in August shortly after another 9% staff-cut earlier in the year. The move reportedly reduced operational costs by 12%.
  • Despite the positive report, Robinhood might not be out of the woods yet. The platform’s been struggling to maintain monthly active users, with 1.8m users leaving the platform for a decrease of 12.8% over the course of the quarter. Its new total user count of 12.2m is the lowest level since the company listed.
See all reported financials
Robinhood
Sep 282022

The sheriff of blockingham

Robinhood is moving further into the world of crypto but it’s doing so at kind of a bad time, with most of the market keeping their crypto close amid the winter frost.

  • Robinhood has launched the beta of its crypto wallets to 10k iOS users as a standalone app, with USDC chosen as its primary stablecoin. It will also feature a crypto rewards program, with 30 tokens supported during the beta.
  • Ethereum layer 2 scaling protocol Polygon was chosen to provide the service. Head of product Seong Seog Lee described its low fees and high transaction speeds as ideal for the developing platform, but it did leave people wondering why they didn’t choose Ethereum instead – Polygon's MATIC hasn’t seen much price action yet though.
  • Robinhood might have a hard time on-boarding users right now, with crypto exchange volumes down almost 70% YoY. Some exchanges like Binance have been trying to restore those volumes by lowering trading fees, but the market-bearishness looks tricky to reverse.
Sep 232022

The SEC will let me be

A decision from the SEC on payment-for-order-flow (PFOF) sends HOOD whipsawing around the chart as traders and investors consider their mixed feelings on the matter.

  • The SEC is looking at ways to govern the nearly $50tn equities market, and after increasing industry pushback and months of lengthy internal discussions, the agency has done a 180° on its previous stance and decided that banning PFOF is no longer on the table.
  • This is an impactful decision for HOOD and other popular brokerages that offer no-fee trading. PFOF is the compensation a broker gets for routing their customers' trades to a market maker like Citadel for execution, and is one of the biggest ways that Robinhood makes money.
  • Robinhood saw declines of 2.7% on Thursday despite being up 11% during intraday trading. It’s likely down to the ambivalence of investors – on the one hand, this is better for HOOD’s core business as they get to keep a revenue stream, but on the other hand retail traders find PFOF “predatory”. The bears seem to have won this round.
Robinhood
Aug 122022

The Sheriff of Nottingham is on his way

Robinhood would prolly like to disappear into the thick of Sherwood Forest as claims of market manipulation come looking for them.

  • Robinhood is facing market manipulation accusations for restricting trading on certain stocks during the ‘memestock’ rally of 2021. They’ve been accused of harming their customer base in efforts to profit from the rally by artificially increasing the supply of the stocks involved, sending HOOD shares down slightly afterhours.
  • Investors in other memestocks are now able to pursue class action lawsuits against the brokerage on the basis that they weren’t able to realize gains given Robinhood stalled trading in the likes of AMC and GME during 2021’s market volatility. Robinhood stands by its decision and said it was the right move during a “once in a generation event” like that.
  • Robinhood isn’t the only one getting attention from regulators recently. Coinbase saw shares plummet 10% to erase its BlackRock-related gains on Thursday after news hit that the SEC is now investigating some of its products, and its crypto-staking programs in the center of the spotlight.
Robinhood
Aug 032022

Robinhood’s “unsettling” earnings

Robinhood leaves its band of investors feeling not-so-merry after dropping its Q2 earnings report a day early, fitted with news of job cuts and “unsettling challenges”.

  • Robinhood shares slid a modest 2% in extended trading on Tuesday to erase its intraday gains after the brokerage reported a mixed bag of Q2 results. Revenues of $318m are up from $299m in Q1, but still down over 44% from the same time last year as growth reverses, though LPS of $0.34 wasn’t as bad as expected.
  • Important metrics are seeing declines across the board, especially when compared to the year-ago quarter – which may be why Robinhood carefully reported sequential comps in its press release instead. Still, monthly active users decreased 10% from Q1 to 14m, and assets under custody have declined by over a third this quarter to come in at $64.2bn.
  • Robinhood is slashing 23% of its workforce, effective immediately – after laying off 9% of its workforce in April – blaming the “deterioration of the macro environment”, inflation, and a broad crypto market crash. New York’s financial regulator piled onto the bad news with a $30m fine, accusing Robinhood of failing in the areas of anti-money laundering and cybersecurity.
See all reported financials
Robinhood
Jun 282022

Robinhood may have a new forest

The rumor mill is busily churning away, generating hot goss that Robinhood is in the throes of takeover talks with FTX.

  • Robinhood surged 14% on Monday and briefly halted trading after a Bloomberg report claimed that crypto exchange FTX is considering buying the struggling platform, whose shares are down over 50% year-to-date. FTX CEO Sam Bankman-Fried said they’re “excited about Robinhood’s business prospects,” but denied active M&A talks.
  • Goldman Sachs touched on the state of various exchanges. The bank upgraded Robinhood on Monday, saying the crypto plunge has taken its stock down to an appropriate level, but in the same breath downgraded competitor Coinbase and said the crypto sell-off would take its stock down 61% this year – COIN lost 10% on Monday.
  • HOOD’s upgrade came despite a congressional report release. The US congressional committee unveiled its findings from an 18-month probe into the wild market swings of January 2021. It questioned the testimony of Robinhood’s CEO, saying his claims on his firm’s liquidity position during the craze wasn’t in line with their findings – keep an eye for more.
Annie Spratt / Unsplash
Jun 092022

Is Robinhood’s revenue under threat?

The SEC’s Gary Gensler wants to overhaul the stock trading market, taking aim at one of Robinhood’s (and others) biggest sources of revenue.

  • The SEC Chair is taking aim at "payment for order flow" (PFOF) practices on Wall Street, which helps retail brokers make cash by selling their customers’ orders to market makers like Citadel who execute them.
  • Gensler’s trying to make the $45tn trading market more fair and transparent. PFOF is v controversial among regulators, who argue it’s a conflict of interest for brokerages and market makers and means that smaller retail traders may end up not getting a fair price on their trades.
  • PFOF makes up around 75% of Robinhood’s revenue, so you can see why they’re stressed – though the stock closed down just under 4%, it’s also sitting around all-time lows. Obvs, the brokerage argues that there’s nothing nefarious going on and investors always get a good price. But Gensler is a determined one so watch this space.
Volkanalgin / Flickr
May 182022

Diversification station

Robinhood looks set to tread on some toes as it launches its own crypto wallet.

  • Robinhood is launching a stand-alone Ethereum-based wallet that will give users total control of their crypto. Until now, the broker controlled wallets on its backend, whereas the new wallets will be non-custodial and will require users to enter private keys. Living up to its English folklore title, Robinhood will also charge zero network fees on trades.
  • The broker is brandishing its bow and arrow to Coinbase and MetaMask by going down this route. Recent poor revenues and falling active users have led Robinhood to restructure its biz, cutting 10% of staff – but this support of non-custodial crypto wallets without gas fees could seriously turn some heads.
  • Speaking of Coinbase the crypto broker has been caught in a hiring hold-up. It had planned to triple the size of its company in 2022, but now it’s slowing its hiring after reporting mega losses in Q1. In fairness, it seems nobody can afford to hire rn – Netflix are even having to cut back, letting go of 150 employees in the US on Tuesday.
Alexandros Sfakianakis / Flickr
May 132022

Robinhood finds new allies

Robinhood goes on a bit of a relief rally after the founder of the FTX exchange says he’s taken a stake in the brokerage, despite its struggling balance sheet.

  • Robinhood bounced up by over 20% in extended trading on Thursday, following the 5% it gained in day trading on the back of a 4.8% recovery in the overall crypto market, and snapping a five-day losing streak that took shares to a new low on Wednesday.
  • FTX founder Sam Bankman-Fried revealed a 7.6% stake in Robinhood after spending $648m on a piece of the pie, with the crypto billionaire calling it an “attractive investment”.
  • Bankman-Fried said he has no intentions of influencing the company… where have we heard that before? Oh yeah. Elon. Ha. He did say that he’d be happy to consider “strategic alternatives”, which could be in Robinhood’s best interest considering its last two earnings reports showed significantly declining revenue and trading volume.

Of course we think it is an attractive investment too. We have the best customer base, are introducing great new products, and we have the team to deliver.

Apr 292022

Robinhood’s running out of people to rescue

Does Robinhood need a vigilante of its own to save it from Q1? Certainly looks like it, but investors don’t seem up to the task.

  • The stock plummeted over 10% in extended trading on Thursday, adding to the 44% it’s already lost YTD. The brokerage missed pretty dramatically on both ends with LPS of $0.45 on revenues that were down an eye-watering 43% to hit $299m.
  • Where have all the traders gone? Monthly active users on Robinhood fell to 15.9m, down 10% YoY, and average revenue per user declined over 61% YoY . Equities and crypto trading are doing equally badly, down 73% and 39% respectively. The company has been adding all sorts of exciting new features recently, but the efforts have yet to be rewarded.
  • Macroeconomic conditions are working against them, says CEO Vlad Tenev, with people less willing to risk money on trading when everything else is so pricey. Robinhood said it’s cutting 9% of its staff to bring down costs, but hasn’t released guidance for the current quarter. You know the old phrase: you can take traders to a brokerage, but you can’t make them buy (or sell).
Matthew Waring / Unsplash
Apr 272022

The not-so-merry men

Robinhood is cutting down its band of merry-men as its CEO makes mad moves to streamline the company.

  • Robinhood is cutting around 9% of its staff. The company currently has around 3.8k employees as of December, and expects to let go of around 1 in 10 of them in an effort to increase efficiency. This comes as a pullback to its initial mega-expansion, which saw its workforce grow six-fold from 2020 to mid-2021.
  • It also comes just before Q1 earnings on Thursday. The brokerage IPO’d last year shortly after the GameStop mania in Jan 2021 and saw traffic rocket on its website, but alas, things aren’t looking so hot anymore – its active user base shrank in Q4 trading volume continues to plummet.
  • Worse yet, its stock hit an all-time low in extended trading in reaction to the news on Tuesday, slumping nearly 6%. Despite this, Robinhood claims to be well-prepared for the future, but only earnings will tell.
TechCrunch / Wikimedia Commons
Apr 202022

Robinhood takes aim at the UK

Robinhood is once again taking its expansion plans up a notch with the acquisition of a UK fintech start-up.

  • The brokerage has bought London-based Ziglu, which is a fintech that lets users trade a bunch of crypto and is one of the few to have secured regulatory approvals over there – nobody said how much they paid, but the app was valued at around £85m ($110m) last November. Shares jumped 5% on the news.
  • The goal is UK and European expansion, and this is actually the brand’s second attempt at taking on the region. The app was planning to launch in the UK in 2020, but had to indefinitely postpone without giving much of a reason – it was mid-pandemic though, so that likely played a part.
  • Covid is over though, and so too seems to be the retail trading frenzy that hit the markets back then. Robinhood is experiencing a rapid decline in trading volume and its shares are down 35% this year, so this seems like the right time to revisit its expansion plans – if regulators will let them.
chris robert / Unsplash
Apr 112022

Goldman has low hopes for crypto

Goldman Sachs steals some of Robinhood’s riches after downgrading the stock and its crypto plans.

  • Robinhood shares lost nearly 7% on Friday to come within $2 of an all-time low. The losses extended a four-day losing streak that saw the stock sink over 16% last week for its worst five-day session since November last year.
  • Goldman downgraded HOOD from neutral to sell and cut its price target to $13, saying Wall Street expectations of the stock are too high. The analyst cited declining user growth, bleak user engagement, and a “limited path to near term profitability” despite its recent efforts to diversify revenue streams.
  • It’s not just Robinhood that got a bearish review. The investment bank said it expects a tough first quarter earnings season for all digital asset companies; forecasting Coinbase, Silvergate, and Robinhood as likely to be hit the worst.
Ivan Radic / Flickr
Apr 082022

Robinhood puts a ring on it

Brokerage Robinhood is ready to walk down the aisle with crypto, giving HODLers a promise ring in the form of a wallet rollout.

  • Robinhood officially rolled out its cryptocurrency wallet on Thursday, giving access to the new highly-anticipated digital product to over 2m customers from the waitlist, after a few months of testing.
  • The Bitcoin Lightning network is set to strike Robinhood. The brand also announced the exciting news that it will soon support Lightning payments for Bitcoin on its platform.
  • It’s all to find other streams of revenue amid a decline in transaction volume, but it’s not the only platform making mad moves – private crypto trading firm eToro recently launched a $20m NFT fund that could threaten Robinhood’s dominance.
Robinhood
Mar 302022

Robinhood gets a bigger forest

Robinhood looks forward to sunny forest evenings, and decides to give its band of merry men longer time to trade in a day.

🔍 Key points:

  • Robinhood shares shot up over 24% on Tuesday in its biggest one day jump since the week of its IPO in August last year, taking prices to their highest level since mid-January.
  • The brokerage has extended its trading day by four hours as the company moves closer to its dream of an open-all-hours trading day, saying “the future of investing is 24/7”. Round the clock trading will obvs appeal to crypto traders who are used to making middle of the night decisions with their portfolios.
  • The app has been struggling to add more customers, watching active users fall to 17.3m in Q4 from 18.9m in Q3 and take a toll on revenue. So, the idea is that they’ll bring in extra $$$ by allowing existing customers extra time to trade in the evenings after work.
Maxim Hopman / Unsplash
Mar 172022

Securities lending on the horizon

Robinhood is adding another arrow to its quiver, planning a loaning feature for its platform as it aims to continue competing with the rest.

🔍 Key points:

  • Robinhood is readying a loan feature for its platform. The new addition, interestingly named the Stock Loan Income Program (SLIP), will let users lend out their stocks to other institutions to earn a passive income.
  • It hopes the new add will help it compete with traditional brokerages like Fidelity Investments and Morgan Stanley’s E*Trade, which both already offer fully paid securities lending.
  • Shares flew nearly 16% on Wednesday in their best day of the year so far to take the stock to a one-month high – so investors clearly think the company is going in the right direction in a post-retail frenzy economy.
Tiffany Hagler-Geard / Bloomberg
Mar 082022

Robinhood adds another feather to its cap

Robinhood aims its arrow at a new spending feature as the platform tries to expand beyond the Sherwood Forest of its brokerage business.

🔍 Key points:

  • The investing app has plans to launch a new spending account feature in conjunction with its new cash card, which will include rewards for spending, cashback, and the ability to roundup payments to the nearest dollar and invest the spare change in the market.
  • Robinhood has big plans to diversify its business. As investor interest in last year’s meme stock mayhem trends subside, so Robinhood is seeing its revenues spiral and is looking for new ways to bring in cash – the spare change feature is already used by a bunch of other trading platforms, so it's a good place to start.
  • Crypto trading platforms have been under pressure recently as fighting in Ukraine continues. Robinhood rival eToro is facing backlash for liquidating positions in Russian supermarket operator Magnit (leaving many saddled with large losses), and Coinbase has blocked 25k Russia-linked crypto addresses. Will Robinhood follow suit?
Robinhood
Feb 142022

Is crypto the key to world domination?

Robinhood is hurting as the retail frenzy fades, so it’s focusing on crypto as the key to its international expansion.

Key Points:
  • Robinhood is going “crypto first” into its international efforts (which is a key area of focus for the brokerage rn) and thinks that digital assets are its biggest chance at gaining traction.
  • Shares are trading near an all-time low after its latest earnings forecast a foggy future in the midst of a decline in the retail trading “fad” that earned Robinhood its rep – not everyone thinks its a bad thing though, and Cathie Wood’s Ark Investment bought the dip.
  • Investments into crypto are becoming more and more prolific even as the market has a rough start to 2022 – $1.19bn was invested into crypto companies last week alone, up nearly 50% from the week before.
Illustration by TradingView
Jan 282022

Robinhood forecasts weak revenue

Robinhood releases its latest earnings report, and let’s just say things aren’t going to plan.

  • The stock sank 15% in extended trading after reporting a wider than expected loss of $0.49 per share on revenues that missed estimates at $362.7m, and things aren’t looking up this year…
  • Has retail trading left the room? Its monthly active users fell to 17.3m from 18.9m the quarter before, missing expectations of 19.8m. It’s hoping a push into crypto wallets and NFTs will help find other streams of revenue.
  • Its outlook is just as bleak. It’s expecting Q1 revenue of less than $340m, down 25% y-o-y – it’s also facing its toughest comparisons yet this quarter, a year on from 2021’s short squeeze chaos.
See all reported financials
Illustration by TradingView