Growth slows again for Robinhood; stock falls after earnings

Jan 27, 2022, 3:44 PM | Updated: Jan 28, 2022, 2:48 am

NEW YORK (AP) — Growth keeps slowing for Robinhood Markets, the upstart company that upended the brokerage industry, and its stock keeps falling.

The company whose easy-to-use trading app helped bring a new generation of investors to the market said Thursday that its revenue rose 14% in the fourth quarter from a year ago, less than half its growth rate in the summer months.

The company also warned that revenue in the current quarter could sag sharply from a year earlier. The forecast was weaker than Wall Street was expecting, and Robinhood’s shares fell 11.5% after the market closed, following up on a 6.4% loss in the regular trading session.

The $362.7 million in revenue that Robinhood made during the last three months of 2021 fell short of analysts’ expectations for $376.3 million. So did its net loss of $423.3 million, or 49 cents per share. Wall Street was looking for a loss of 35 cents, according to FactSet.

Robinhood’s business does best when people use its app to trade often, because it makes money by routing their orders to market makers and big trading firms. That wasn’t a problem in the first quarter of 2021, when hordes of smaller-pocketed investors banded together to drive shares of GameStop, AMC and other “meme stocks” to dizzying levels. Nor was it an issue in the second quarter of 2021, when record-breaking jumps for dogecoin and other cryptocurrencies drove another surge of trading.

The question is whether traders will trade as much on their phones now. Conditions may get only tougher for markets as the Federal Reserve looks set to raise interest rates sharply in an effort to tame inflation.

Since the start of 2022, Robinhood has seen customers making fewer trades and in smaller amounts, Chief Financial Officer Jason Warnick said in a conference call following the release of the results. But in the last few days, he said, Robinhood has seen higher levels of trading and engagement.

“It’s too soon to say” whether that ends up becoming a sustainable trend, he said. But the company said its revenue may total less than $340 million for the first three months of 2022. That would be down significantly from the $522.2 million it took in during the first quarter of 2021 and more than $100 million below what analysts were forecasting.

Robinhood’s stock has been steadily falling since touching $85 shortly after its initial public offering last summer. It’s down 34.6% already in 2022.

“Let’s not sugarcoat it, we’ve been disappointed,” Robinhood CEO Vlad Tenev said about the stock’s recent performance in the conference call discussing the quarterly results.

But he said the company is making investments to grow over the long term, and it expects costs to grow more slowly going forward.

“I’ve never been more optimistic” about the future of Robinhood, Tenev said.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


This combination photo of celebrities with birthdays from Oct. 2 - Oct. 8 shows Sting, from left, G...
Associated Press

Celebrity birthdays for the week of Oct. 2-8

Celebrity birthdays for the week of Oct. 2-8: Oct. 2: Critic Rex Reed is 84. Singer Don McLean is 77. Country singer Jo-el Sonnier is 76. Actor Avery Brooks (“Star Trek: Deep Space Nine”) is 74. Guitarist Mike Rutherford of Genesis and Mike and the Mechanics is 72. Musician Sting is 71. Actor Robin Riker […]
7 hours ago
California Insurance Commissioner Ricardo Lara speaks at a state Capitol news conference in Sacrame...
Associated Press

Insurers say California’s inaction threatens auto policies

SACRAMENTO, Calif. (AP) — Top U.S. insurance companies and associations say California is risking a crisis in the nation’s largest automobile insurance market by refusing to approve any rate increases for more than two years, since the start of the coronavirus pandemic. The companies already are cutting back and say they can’t continue operating at […]
7 hours ago
Associated Press

War in Ukraine drags on global economy into 2023, OECD says

PARIS (AP) — Russia’s war in Ukraine and the lingering effects of the COVID-19 pandemic are dragging down global economic growth more than expected and driving up inflation that will stay high into next year, the Organization for Economic Cooperation and Development said Monday in a darkening outlook. The Paris-based organization projects worldwide growth to […]
7 hours ago
This screen shot from a Zoom video hearing shows Michael Carneal on Tuesday, Sept. 20, 2022 at Kent...
Associated Press

Kentucky man who shot classmates in ’97 imprisoned for life

A Kentucky man who killed three fellow students and wounded five others when he was 14 years old will have to spend the rest of his life in prison without another opportunity to seek parole, the Kentucky Parole Board voted Monday. Michael Carneal, now 39, told parole board members last week that he would live […]
7 hours ago
This cover image released by Blackstone Publishing shows "Courage Under Fire: Under Siege and Outnu...
Associated Press

Former U.S. Capitol Police chief has deal for Jan. 6 book

NEW YORK (AP) — The chief of the U.S. Capitol Police during the Jan. 6 siege has a book deal. Steven A. Sund’s “Courage Under Fire: Under Siege and Outnumbered 58 to 1 on January 6” will come out Jan. 3, just shy of the two-year anniversary of the riot by supporters of President Donald […]
7 hours ago
Associated Press

Proposed Nebraska mine raises up to $366M of $1.1B it needs

OMAHA, Neb. (AP) — A mining company that wants to extract an assortment of rare elements from southeast Nebraska has announced an agreement that will provide up to $285 million to help cover the roughly $1.1 billion cost of building the mine. In addition to the acquisition of a special purpose acquisition company called GX […]
7 hours ago

Sponsored Articles

Children’s Cancer Network

Children’s Cancer Network celebrates cancer-fighting superheroes, raises funds during September’s Childhood Cancer Awareness Month

Jace Hyduchak was like most other kids in his kindergarten class: He loved to play basketball, dress up like his favorite superheroes and jump as high as his pint-sized body would take him on his backyard trampoline.

Key dates for Arizona sports fans to look forward to this fall

Fall brings new beginnings in different ways for Arizona’s professional sports teams like the Cardinals and Coyotes.
(Courtesy Condor)...
Condor Airlines

Condor Airlines shows passion for destinations from Sky Harbor with new-look aircraft

Condor Airlines brings passion to each flight and connects people to their dream destinations throughout the world.
Growth slows again for Robinhood; stock falls after earnings