NEW YORK: Growth remains slow for Robinhood Markets, the upstart company that drives the brokerage industry, and its stock keeps falling.
The company whose easy-to-use trading app helped bring a new generation of investors to market said Thursday that its revenue grew 14% in the fourth quarter from a year ago, more than half its growth rate in the summer months. is also less.
The company also warned that revenue in the current first quarter could decline faster than the year-ago quarter. Its shares, which dropped 6.4% in regular trading hours, fell 9.5% after the market closed at $10.51.
The $362.7 million in revenue Robinhood generated during the last three months of 2021 fell short of analysts’ expectations for $376.3 million. Its net loss was $423.7 million, or 49 cents per share. Wall Street was looking for a slight loss of 35 cents, according to FactSet.
Robinhood Business is best when people use its app to trade frequently, as it makes money by sending their orders to market makers and large trading firms. That wasn’t a problem in the first quarter of 2021, when hordes of small-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 the record-breaking jump for Dogecoin and other cryptocurrencies sparked another surge in trading.
The question is whether traders will now trade as much on their phones. Conditions could only get tougher for the markets as the Federal Reserve prepares to raise interest rates sharply in an effort to tame inflation.
Robinhood said its revenue could fall below $340 million in the first three months of 2022, which would be significantly less than the $522.2 million it took in during the first quarter of 2021.
That would be more than $100 million more than analysts had predicted.
Robinhood’s stock has been falling steadily since touching $85 shortly after its initial public offering last summer. It is already down 34.6% in 2022.
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