Robinhood shares slide 8.5% in after-hours trading on October 26. The drop was driven by a 78% decline—from $233 million to $51 million—in revenue tied to digital-asset trading in the third quarter.
The share of crypto-trading in the total transaction revenue for July–September fell to 19.1% from 51.7% in the prior quarter.
As a result, the company’s cumulative net income of $365 million fell well short of the consensus forecast of $437.1 million by FactSet analysts. On a quarterly basis, the figure declined by 35%. Earnings per share were $2.06, versus market expectations of $0.67.
The number of funded accounts declined from 22.5 million to 22.4 million, while analysts on average expected growth to 24 million. The number of active traders on a monthly basis dropped from 21.3 million to 18.9 million, and assets declined from $102 billion to $95 billion.
Robinhood management said that seasonality, asset volatility, retail-investor behavior, and unforeseen market events contributed to the deterioration in financial results.
Top management did not rule out the persistence of these factors into October–December.
“In the absence of changes in market conditions or external events, this could lead to quarterly revenue of no more than $325 million and $1.8 billion for 2021.”, the report said.
Robinhood CEO Vlad Tenev laid high hopes on cryptocurrencies in light of the development of a digital wallet that will allow customers to deposit and withdraw cryptocurrency on the platform. In the waitlist are listed more than 1 million users of the app.
“In the future we will launch pension accounts with tax benefits to help everyone invest for the long term”, Tenev promised.
Robinhood also noted the risks of changes to SEC regulation or a ban on paying for order flow. This practice accounts for a lion’s share of the company’s revenue.
In September, the online broker launched a service for recurring crypto investments.
Earlier, Robinhood CEO Vlad Tenev called cryptocurrencies the foundation of Robinhood’s future development Robinhood.
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