Robinhood shares drop 8.5% as third quarter crypto trading volumes decline

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Crypto trading gives, and crypto trading takes away.

After having its first half 2021 results fueled by intoxicating crypto trading volumes, online broker Robinhood (NASDAQ: HOOD) released somewhat disappointing numbers for the third quarter of 2021. The company’s shares, which had had already fallen by more than 10% since the beginning of September, reacted by losing about 8.5% of their after-sales value Tuesday evening.

Robinhood said crypto activity declined from record highs in the previous quarter, resulting in significantly fewer new funded accounts, a slight decline in cumulative net funded accounts, and lower revenue in the third quarter of 2021 ($ 365 million ) compared to the second quarter of 2021 ($ 565 million) at Robinhood.

Regarding the outlook, Robinhood said its business is affected by many factors including seasonality, general market conditions (including volatility) and behavior of retail traders as well as significant market events and unforeseen. For the three months ending December 31, 2021 (i.e. Q4-2021), Robinhood expects many of the factors that impacted third quarter results, such as seasonal headwinds and the decline in retail activity could persist. In the absence of any changes in the market environment or exogenous events, the company estimates that this could result in quarterly revenues of no more than $ 325 million and annual revenues of less than $ 1.8 billion. Additionally, Robinhood expects new funded accounts for Q4 to roughly match the 660,000 opened in Q3 2021.

In summary, for Q3:

Total net revenue increased 35% to $ 365 million, from $ 270 million in the third quarter of 2020, but as reported well below the $ 565 million in the second quarter. Transaction-based revenue rose 32% to $ 267 million, from $ 202 million in the third quarter of 2020. Options rose 29% to $ 164 million, from $ 127 million in the third quarter of 2020. 2020. Cryptocurrencies are up 860% to $ 51 million, from $ 5 million in Q3 2020 – but again, well below the $ 233 million in crypto revenue that Robinhood saw in the second trimester. Shares were down 27% to $ 50 million from $ 69 million in the third quarter of 2020. The loss before income taxes was $ 1.37 billion, from a loss pre-tax of $ 11 million in the third quarter of 2020. Stock-based compensation expense totaled $ 1.24. billion dollars in the third quarter of 2021, of which $ 1.01 billion was recognized when we went public. Net loss was $ 1.32 billion, or $ 2.06 per diluted share, compared to a net loss of $ 11 million, or $ 0.05 per diluted share in the third quarter of 2020. The Adjusted EBITDA (non-GAAP) was negative $ 84 million, compared to the third quarter of 2020. Cumulative net funded accounts increased 97% to 22.4 million, compared to 11.4 million in the third quarter of 2020. Monthly active users (MAU) grew 76% to 18.9 million, from 10.7 million in the third quarter of 2020. Assets under custody (AUC) increased 115% to $ 95 billion, from $ 44 billion dollars in the third quarter of 2020. Average revenue per user (ARPU) fell 36% to $ 65, from $ 102 in the third quarter of 2020.

Vlad tenev

Vlad Tenev, CEO and Co-Founder of Robinhood Markets said:

“This quarter was dedicated to developing more products and services for our clients, including crypto wallets. Over a million people have joined our crypto wallet waiting list to date. With 24/7 live phone support, we believe Robinhood is emerging as the most reliable and intuitive platform for retail and crypto investors. And going forward, we’re committed to providing tax-efficient retirement accounts to help everyone invest for the long term.

Robinhood opened the waiting list for crypto wallets, one of its most requested products. Over a million customers have signed up to date. Robinhood’s Crypto Wallets feature is designed to help make crypto more accessible for the average investor, with an intuitive user experience and competitive pricing at low cost. The feature is built in public, collects critical customer feedback, and uses a new multi-factor authentication verification app to ensure a secure and reliable experience.

Robinhood has also launched recurring crypto investments, allowing customers to automatically purchase crypto, commission-free, on a schedule of their choice. This product allows clients to build positions in their preferred cryptocurrencies over time while reducing stress related to market timing.

Robinhood Snacks, digestible financial news content, is now available directly from the Robinhood app. The Snacks newsletter is already one of the most consumed newsletters in the United States with 23.3 million unique readers in the third quarter. Additionally, the Snacks podcast was downloaded 10.8 million times during the quarter. Robinhood also launched Snacks on Snapchat, making Snacks one of the first financial education channels to be available on Snapchat’s Discover tab.

Over the past week, Robinhood began rolling out its referral engine, which helps clients get started by offering new clients who have not yet completed their first transaction a diverse set of portfolios to choose from.

Recently, Robinhood entered the final stages of the ACATS-In test, which will allow clients to transfer their existing investments into Robinhood. The company plans to roll out this feature to customers in the coming months.

As part of Robinhood’s new product roadmap, the company is committed to providing tax-efficient retirement accounts and although there is no definitive timeline on this product, the company will continue to provide updates on his progress.

IPO Access continues to attract issuers and retain customers. To date, Robinhood has partnered with 12 companies that have made their IPOs available to its clients. These companies come from a wide range of industries including consumer, enterprise software, healthcare, and sustainable blockchain. Six of these companies have crossed 30 days since their listing on the platform. In these six IPOs, Robinhood clients held more than 80% of their allotted shares 30 days after the IPO, once again demonstrating the platform’s ability to connect issuers with a retail shareholder base. dedicated.

In the third quarter, seven additional issuers joined the recently acquired Say Technologies platform to provide individual investors with access to company events such as earnings calls, with a total of 18 issuers using the platform. Say Connect use cases continue to evolve beyond Q&A on earnings calls, as companies now use the Say Connect platform for Annual Shareholder Meeting Q&A and retail shareholder question-and-answer forums.

Robinhood also reminded investors that many of the company’s shareholders prior to the IPO are subject to lock-up agreements or market-lock agreements that limit their sale of shares in the company during a lock-up period that expires immediately before December 1, 2021.

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