Robinhood Q4 earnings miss estimates, shares plunge

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Stock-trading app Robinhood shares plunged 15% intraday on Thursday after the company reported earnings below street estimates. Robinhood has given a bleak revenue forecast for the first quarter of 2022. Here are major highlights from the results. 

Increase in revenue: The total revenue increased to $363 million compared to $318 million in the year-ago period, a growth of 14%. Transaction-based revenue for Q4'21 increased to $264 million from $235 million in Q4'20, a growth of 12% YoY. The break is as follows:

  • Options for the quarter increased to $163 million, a growth of 14% YoY.
  • Cryptocurrencies for the quarter increased to $48 million, a growth of 304% YoY.
  • Equities for the quarter decreased to $52 million, a decline of 35% YoY.

Net Loss: The company reported a net loss of $423 million or $0.49 per diluted share in Q4'21 compared with net income of $13 million or $0.02 per diluted share in Q4'20.

Adjusted EBITDA: The Adjusted EBITDA for Q4'21 was ($87) million compared with $79 million in the year-ago period.

Monthly Active Users (MAU): Monthly active users increased to 17.3 million in December 2021 from 11.7 million in December 2020, a growth of 48% YoY. Sequentially, MAU decreased 8% compared with 18.9 million for the September quarter. Average Revenues Per User (ARPU) for the quarter decreased 39% to $64 on an annualized basis, compared with $106 in the fourth quarter of 2020. 

Target Price: The 13 analysts offering 12-month price forecasts for Robinhood Markets Inc have a median target of $23, with a high estimate of $58 and a low estimate of $15. The share price of Robinhood closed 6.45% lower at $11.61 on Thursday.

Robinhood Q4 earnings 2021: Review

The company has reported a weak set of numbers for Q4'21. Robinhood said that it expects to generate total revenue of less than $340 million in Q1 FY22. At the top end of its estimate, that would imply a revenue decline of 35% compared to Q1 FY 2021. Robinhood’s net revenue misses Bloomberg’s estimates of $370.9 million. Revenue from equities trading dropped 35% to $52 million from the same period a year earlier. However, certain numbers do look good. For example, in 2021, Robinhood added over 10 million net funded accounts, nearly doubling the customers on the platform. The company is planning a full launch of its crypto wallets in the March-22 quarter.