Robinhood Sinks: Low Revenue, Stocks down, Staff Fired

On Thursday Popular investing app Robinhood informed that it will no longer be providing revenue guidance. This announcement came after it posted the first-quarter results. In fact, the company seems to have missed Wall Street revenue estimates.

Shares of the trading app have reportedly lost around 9% in after-hours trading. The firm proclaimed a loss of $392 million, or 45 cents a share, on revenue of $299 million, which indicates a 43% drop from the quarter a year ago.

Further, Robinhood’s active users tumbled 10% from 17.7 million (March 2021) to 15.9 million (March 2022). Notably, Robinhood has not acknowledged profit since its market debut.

Another fact to mention here is that the transaction-based revenue from cryptocurrencies, which has been a benefit for Robinhood in prior quarters, fell 39% to $54 million this quarter.

Robinhood Crisis Insights

Robinhood-Sinks-Stocks-Down

Robinhood Chief Executive Officer Vlad Tenev shared some insights into this issue, he said, for most of its history, Robinhood has operated in a period of low-interest rates, low inflation, and rising markets. Their customers are now experiencing all three of these trends going in the opposite direction, maybe for the first time in their lives.

Also, in what seems like an act of desperation, the company has fired 9% of its 3,800 member crew. Tenev attributed this huge termination to the creation of identical roles and job functions that resulted from the rapid headcount growth. He said it rendered more layers and complexity.

Chief Financial Officer Jason Warnick explained to journalists that they were moving back to being a lean company with a leaner operating model, beginning with the reduction in force.

Robinhood had grown significantly in popularity, especially after assisting traders in GameStop and AMC. But, now the fame has sagged off and it remains to be seen what the future holds for this trading app.


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