Robinhood Stock Falls As Q3 Results And Q4 Guidance Disappoint
Shares of Robinhood gained strong downside momentum after the company released its quarterly results.
Robinhood reported revenue of $365 million and GAAP loss of $2.06 per share, missing analyst estimates. Robinhood’s crypto trading revenue declined from $233 million in Q2 2021 to just $51 million in Q3 2021. Previously, most of the crypto trading revenue came from Dogecoin, whose popularity declined as competition from Shiba Inu increased.
This time, Robinhood did not provide information on Dogecoin-related revenue, but it is obvious that it suffered a serious pullback in the third quarter.
Robinhood stated that factors that impacted Q3 2021 results, like seasonal headwinds and lower retail trading activity, will also be in play in the fourth quarter of this year.
In this light, the company expects that its revenue will not exceed $325 million in Q4 2021. Robinhood also expects that the number of new funded accounts will be roughly in line with 660,000 that were opened in Q3 2021.
What’s Next For Robinhood Stock?
The third-quarter report highlighted Robinhood’s dependence on crypto-related revenue. As revenue from Dogecoin and other cryptocurrencies declined, the company’s results suffered a major setback.
The Q4 2021 guidance is disappointing as revenue will continue to fall. It remains to be seen whether Robinhood will be able to find something that will replace Dogecoin-related revenue in the upcoming quarters.
Not surprisingly, investors are worried about Robinhood’s ability to grow at a fast pace. While year-over-year comparisons look great as Robinhood was one of the main beneficiaries of retail trading boom, the company’s results do not look good on a quarter-over-quarter basis.
Analysts expect that the company will not be able to show profits in 2021 and 2022, so Robinhood’s valuation depends on its growth. It remains to be seen whether speculative traders will rush into Robinhood shares after the sell-off in a market that is so focused on growth.
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