Robinhood’s Impossible Divination; Correction On The Horizon?
Robinhood’s Round Robin
If you think that earnings are all in the revenue … c’mon, you got it all wrong, man.
And if you think PFOF is all we ever do — oh well, then do the twist, Robinhood…
A little “Denial Twist” by The White Stripes? Anybody out there? OK then…
The denial twist is all that Robinhood (Nasdaq: HOOD) can do today. Deny that its post-IPO hype is over. Deny that it’s facing existential crisis after existential crisis (join the club, Robinhood). Deny, deny, deny.
I mean, did you see last night’s stinker of a report? Literally everything that could’ve gone wrong with Robinhood’s report did … and yet the brokerage still hasn’t learned what we’ll call “proper communication with investors.” Or heck, even just “reassurance.”
Now, I’m not one for relishing in schadenfreude … oh, who am I kidding. That’s literally why we started this rag — pointing at corporate disasters like they’re train wrecks you can’t look away from.
Robinhood’s total revenue came in at $365 million and missed estimates for $431.5 million. It’s also way way down from Robinhood’s revenue of $565 million in the previous quarter. Crypto revenue, which Robinhood excelled at in its previous report, dropped from $233 million to just $51 million. Oh, happy days…
For all that hassle, all that hullabaloo, Robinhood still reported a loss of $2.06 per share. Even Wall Street was more optimistic with its $1.37-per-share loss target.
Granted, it’s no surprise why Robinhood’s earnings and revenue are in the can: Monthly active users (MAUs) and average revenue per user are both down for the first time since Robinhood started reporting.
MAUs dropped from 21.3 million last quarter to 18.9 million this quarter as more investors and traders leave to greener brokerage pastures.
But hey, maybe Robinhood has some glimmer of hope … some optimism to help mollify investors after its quarterly disaster. Am I right?
Narrator: He was quite wrong.
Remember, fewer users on Robinhood means lower trading revenues for Robinhood. And now the brokerage doesn’t even expect its revenue to hit $325 this quarter, with little to no user growth. In fact, Robinhood itself stated:
Tremendous insights, Robinhood. Isn’t this exactly the kinda security y’all look for in a brokerage?
Here we see the crux of everything wrong with Robinhood and its merry moneymaking men. Surprise, it’s the same seesaw of sentiment that was made glaringly obvious way back when the GameStop debacle first unfolded.
Robinhood will live or die by the sword of its customer sentiment … and when that sentiment slips, so too does investor sentiment for HOOD. End of story.
Meanwhile, you have the notably anti-Robinhood crowd over on Reddit’s WallStreetBets claiming: “We did it! Robinhood’s retreating!” Considering the company is literally losing millions of users and billions of dollars every quarter … maybe those claims aren’t entirely far off from reality.
Robinhood’s losing the same customers it needs for that sweet, sweet PFOF and HOOD investors are viscerally aware of this fact … even if Robinhood itself is in total denial and offers no course of action to remedy the ‘Hood. This isn’t ending anytime soon.
By the time next earnings season rolls around, I Sherwood hope that Robinhood has finally found a way to better divest and grow its revenue streams … you know, like the big boy brokerage it wants to be.
HOOD crashed about 11% after its report dropped. But enough about Robinhood…
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And now for something completely different: today’s Poll of the Week…
In last week’s poll, it was all about Netflix’s (Nasdaq: NFLX) new affliction … the ex-streaming king’s transition to blue-chip boredom. We wanted to know if you would still invest in Netflix now that the obscene growth of yore is no more.
A whopping 59.4% of you agree with Great Stuff Picks that there are far better options in the streaming market than Netflix. (*Cough* Disney and Roku!) Another 31.3% of you say: “What’s wrong with a solid blue chip?”
And normally, I wouldn’t disagree … but this is Netflix we’re talking about.
Oh, and shout out to the 9.3% of you out there trading NFLX options like the mad lads (and lasses) y’all are — congrats and good luck! Now on to bigger and better things: this week’s poll.
If you’re a regular Great One, you already know that I see a market correction on the horizon … and the not-so-distant horizon at that. It’s only what I’ve been yammering on about for the better part of two weeks.
Between rising inflation concerns, the Great Resignation sweeping across the land, supply chain catastrophes and a housing market that looks very similar to the 2007/2008 homebuying runup … there’s no shortage of red flags to contend with.
Which is why I want to know: Which market risk has been giving you a case of the night terrors?
Or are you one of those lucky ducks who gets a full eight hours no matter what’s going on in the broader market … or how early your neighbor’s dog starts howling at the wind? (Seriously, put a muzzle on that hell beast.)
Let us know in the poll below: