Retail brokerage Robinhood fell short of its revenue targets in the final quarter of 2021, as the trading fervour in stocks and cryptocurrencies slowed in a more volatile market.
Robinhood, which became synonymous with the rise of trading by everyday investors since the start of the pandemic, reported net revenue of $363m, $7m short of expectations.
The broker’s shares shed 10.9 per cent to $10.35 in after hours trading on Thursday, taking the decline since their initial public offering last summer to more than 70 per cent. Shares hit a record of $85 in August.
Robinhood’s annual results come almost exactly a year after thousands of retail traders organised on the social media platform Reddit to bid up the prices of a handful of hard-luck companies such as Gamestop and cinema operator AMC.
But the company’s share price has struggled more recently as the forces – like fiscal stimulus, pandemic lockdowns and bull markets – that supported its IPO valuation have stuttered. Revenue from cryptocurrency trading, vital to the company’s revenue, was up 304 per cent from the same quarter last year to $48m, but was down from $51m in the third quarter.
Robinhood’s main source of revenue, payment for order flow, is likely to face increased scrutiny from regulators. The company’s revenues from payment for order flow for the quarter increased 12 per cent from the year prior to $263m, but slowed from the previous quarter, when it made $267m in transaction-based revenue.
The brokerage said it hopes to reduce its dependency on the practice, but will never be independent from it.