Robinhood had a net loss of $ 1.32 billion this past quarter, a 78% drop in revenue from crypto transactions since 2Q. At 9:46 a.m. in New York, their shares fell 12% to 34.80, $ 38 less than the IPO price at the end of July, Bloomberg reported.
Analysts had estimated that Robinhood Markets Inc.’s total revenue would be $ 423.9 million at the time of the previous Bloomberg survey, but that number has dropped to just $ 364.9 million.
Vlad Tenev, Robinhood’s chief executive officer, predicted that trading activity would decline in the third quarter of 2021 and fewer accounts would be opened. As he said during the Q3 earnings call, the rolling numbers don’t worry them because they have short-term goals.
May be as low as the fourth trimesterQ4’s successor expects that “total revenue will be less than $ 325 million and full-year revenue will be less than $ 1.8 billion ৷ on top of that, it means full-year revenue growth of 85 percent,” said Jason Warnick, chief financial officer.
Warnick further reminded them that they typically show a “seasonal curve that shows higher growth in the first quarter of the year than in the last three quarters.”, And further explained their Q3 focus on building a team:
We continue to make progress in building our teams primarily with growth in engineering, customer service, and our regulatory, and compliance teams. In the quarter, we added 580 new full-time employees across the company, up 21 percent from Q2.
Warnick added that they are not worried about near-term profitability, but rather they feel safe about being “a profitable company in the long run.”
Robinhood’s crypto activity drop-off
Robinhood reports they show a large drop-off on their monthly active users (MAUs), which rose from 21.3 million in the second quarter to 18.9 million in the third quarter. Their crypto activity also declined, as they had significantly fewer new funded accounts.
Many thought that Robinhood would improve the way of investing in the crypto market. However, many think they can meet the interest of many of their clients, such as assembling new digital coins.
Related Reading | Strategist: The next wave of bitcoin investors will probably come from Robinhood
Crypto activity and revenue play a big role in Robinhood’s platform. The waiting list has grown to 1 million clients since they announced their intention to offer a crypto wallet. Regarding the potential growth that this project could bring, Tenev commented:
We actually believe that by rolling out wallets, we will go a long way in addressing the initial pain that customers are experiencing at the moment.
Vs. regulatory requirements. Crypto platform
Tenev Earnings said during the call that “the regulatory landscape is increasingly uncertain.” Since they want to increase their involvement in the crypto space, they want to keep an eye on their platform and keep it safe by “introducing products that comply with legal and regulatory requirements.”
He explains that Robinhood is carefully looking at the new virtual currency, but they remain focused on meeting regulatory guidelines because they don’t want another run-in.
Related Reading | Robinhood has been fined M 70M for causing “significant damage” to customers
In a recent interview with Bloomberg, Spencer Bogart, Blockchain Capital General Partner, reacted to Robinhood’s tumbling numbers and suggested that the drop-off be aligned with the frustration that makes crypto platforms the U.S.’s historically unfriendly rules for crypto platforms.
Bogart explained that “historically, the United States has been so friendly to innovation in crypto space that most platforms are forced to ban Americans.” In his view, the regulations have acted against the freedoms of the American people rather than being effective in their favor.
For a country founded on the principles of freedom, growth and innovation, seeing the United States on a short list of services that these integrated crypto platforms cannot offer, along with Syria, Sudan and North Korea, is not only an insult, it is a way to access this technology. Should be detrimental to the American people.
He makes it clear that he is unsure about Robinhood’s internal affairs, but he understands the landscape behind Tenev’s comments about the regulatory situation “where there really isn’t too much clarity.” However, he remained positive because he saw “turning the tide” for crypto.
Robinhood is not worried about Q4 results and they are aiming to play profitability slowly and steadily. Warnick says they are investing in crypto and look forward to diversifying their product selection.