Robinhood active users have now declined by a whopping 3,200,000 this year according to the company’s latest report.
As a result, transaction-based revenue declined 5% in the second quarter.
Monthly active users also decreased to 10.8 million, one million fewer compared to the previous quarter and 3.2 million fewer than the year prior per Reuters.
Earnings per share in the second quarter were $0.03, beating analysts’ average estimate of a loss of $0.01, according to Refinitiv data.
“We’ve been talking about for the last several quarters how we want to be lean and scrappy from a cost perspective, and we’ve been keeping our eye on that very closely,” Jason Warnick, Robinhood’s chief financial officer, told reporters.
Robinhood (NASDAQ:HOOD) stock fell more than -6% on Thursday based the decline in users report.
“The company reported higher second-quarter revenue on Wednesday as interest rates continued to increase the online brokerage’s interest income, achieving profitability for the first time as a public company even as it saw fewer users.
Net interest revenue soared 243% to $442 million in the second quarter compared to a year earlier, as the brokerage’s margin investing business benefited from the U.S. central bank’s monetary policy tightening campaign to combat decades-high inflation.”
Mizuho Americas Senior Financial Technology Analyst Dan Dolev says Robinhood could be the next Charles Schwab.
“I’m actually seeing results being very, very strong and, to me, that’s more important than a data point on users,” Dolev says of Robinhood’s second quarter results.
Robinhood continues to be scrutinized by many retail investors in 2023 ever since it’s collusion with big hedge funds, Citadel being one, during the ‘meme stock’ frenzy of 2021.
Other Recent Robinhood News
In late June, Robinhood reported that it is letting go about 7% of its full-time employees, or about 150 people marking its third round of layoffs in just over a year as customer trading activity on the platform slows down.
The layoffs were made to “adjust to volumes and to better align team structures,” Chief Financial Officer Jason Warnick said in the message.
Robinhood cut more than 1,000 jobs in two rounds of layoffs last year.
As of the end of 2022, Robinhood had about 2,300 full-time employees, according to its annual report.
“We’re ensuring operational excellence in how we work together on an ongoing basis. In some cases, this may mean teams make changes based on volume, workload, org design, and more,” a Robinhood spokesperson said in a statement Monday.
The company experienced an increase in employees voluntarily leaving the company and declines in reported employee job satisfaction in the time immediately after the layoffs last April and August, Robinhood said in its last quarterly report.
As of May, Robinhood had fewer than 11 million monthly active users.
Transaction-based revenue in the first quarter dropped 5% year over year and was more than halved from the first quarter of 2021, per WSJ.
Robinhood recently acquired credit card startup X1 in a $95 million cash deal to expand offerings beyond trading.
Hood stock is up more than +43% this year-to-date but down more than -66% since its IPO date.
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