NEW YORK: 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 first quarter could decline sharply compared to the year-ago quarter. Its shares, which dropped 6.4% in regular trading hours, fell 9.5% after the market closed to $10.51.
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 $423.7 million, or 49 cents per share. Wall Street was looking for a milder loss of 35 cents, according to FactSet.
Robinhoods 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 wasnt 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.
Robinhood said that its revenue may be less than $340 million in the first three months of 2022, which would be down significantly from the $522.2 million it took in during the first quarter of 2021.
That would be more than $100 million below what analysts were forecasting.
Robinhoods stock has been steadily falling since touching $85 shortly after its initial public offering last summer. It’s down 34.6% already in 2022.
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