Shares of stock trading app Robinhood (NASDAQ:HOOD) fell more than 10% after the company reported a huge revenue miss for the third quarter and announced that cryptocurrency trading on its platform has slowed dramatically.
Robinhood said that, barring any change in the market environment, lower retail trading activity will persist into next year (2022).
For the third quarter, the company’s total net revenue came in at $365 million U.S., missing a Refinitiv data estimate of $431.5 million U.S.
Revenues increased 35% year-over-year but were well below the second quarter’s revenue of $565 million U.S, which was bolstered by a massive surge in cryptocurrency trading.
Third-quarter transaction-based revenue totaled $267 million U.S., with only $51 million U.S. coming from trading of cryptocurrencies such as Bitcoin and Ethereum. Revenue from cryptocurrency trading totaled $233 million U.S. in this year’s second quarter, helped by elevated interest in meme-inspired digital token Dogecoin.
Options trading contributed $164 million U.S., and equities trading added $50 million U.S. to transaction-based revenue. Net cumulative accounts dropped to 22.4 million in the third quarter from 22.5 million in the second quarter.
Monthly active users on the Robinhood platform totaled 18.9 million, down from 21.3 million in the second quarter. Average revenue per user decreased by 36% to $65 U.S. year-over-year from $102 U.S.
Robinhood reported a net loss of $1.32 billion U.S, or $2.06 U.S. per share. Wall Street was expecting a loss of $1.37 U.S. per share, according to Refinitiv data.
Looking ahead, Robinhood said it expects fourth-quarter revenue no greater than $325 million U.S. The company sees account growth in line with the 660,000 opened in the third quarter of 2021.
Robinhood went public in July of this year, opening at $38 U.S. per share. The stock closed at $39.57 U.S. per share on Tuesday of this week (October 26).
