Investing app Robinhood revealed a large revenue miss for the third quarter due to a decline in bitcoin trading.
Robinhood expects the same headwinds that slowed retail trading activity last quarter to continue until the year-end.
After-hours trading saw the newly listed company’s stock fall 8%.
Robinhood loses money
Revenue of $365 million for the third quarter missed Refinitiv’s estimate of $431.5 million. Revenues rose 35% year-on-year but fell short of the second quarter’s $565 million, boosted by a significant jump in crypto trading.
In the third quarter, barely $51 million came from bitcoin trading. Interest in meme-inspired dogecoin boosted second-quarter crypto trading revenue to $233 million.
“Q2 was one of those unusual market events,” Robinhood CFO Jason Warnick told CNBC. “We love it when it happens. It’s a terrific method to get new customers on board. But we’re seriously considering long-term crypto investments. And so, really, we won’t be able to anticipate quarterly sales reliably.”
Options trading brought in $164 million, and stocks trading brought in $50 million.
Net cumulative accounts fell to 22.4 million in Q3 from 22.5 million in Q2. Monthly active users fell to 18.9 million from 21.3 million in Q2.
Average revenue per user fell 36% to $65 from $102 last year.
Robinhood lost $1.32 billion ($2.06 per share). Refinitiv says analysts were anticipating a $1.37 loss per share. In the third quarter of 2021, severance costs were $1.24 billion.
We developed new products and services for our customers, including crypto wallets,” said Robinhood Markets CEO and co-founder Vlad Tenev. “We now have over a million people on our crypto wallet waitlist.”
Robinhood predicts fourth-quarter revenue of $325 million. The business expects 660,000 new accounts in the third quarter of 2021.
“We expect many of the same reasons affecting our third-quarter performance, such as seasonal headwinds and lower retail trading activity,” the company said in a press release.
Robinhood went public in July at $38 per share. On Tuesday, the stock finished at $39.57.