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Multi-trading facilitator Robinhood reported a smaller-than-expected loss for Q3 2022 primarily due to the underperformance of riskier assets.
Robinhood (NASDAQ: HOOD) recently posted its Q3 2022 financial statement showing a quarterly net loss of $175 million. This deficit came in much lower and better than the steeper $311 million loss that analysts were expecting for the period. Much of Robinhood’s overall drop in third-quarter performance can reportedly be ascribed to a fall in crypto trading volumes. For example, crypto transaction revenue declined 12% year-over-year (YoY) to $51 million.
Robinhood Q3 2022 Takeaways
For the Q3 2022 period, Robinhood reported a decline in monthly active users (MUA) from 14 million to 12.2 million. This translated to a loss of 20 cents per share on $361 million in revenue for the period that ended September 30th. However, Robinhood’s revenue deficit again comes ahead of expectations of a 31-cent loss per share, and slightly under revenue expectations of $362 million. The financial services platform also reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) at $47 million. This development marks a substantial improvement from the negative $80 million seen in the preceding quarter, and also beats analysts’ estimate of negative $48 million.
Meanwhile, Robinhood’s transaction revenue rose 3% from $202 million in the second quarter to $208 million in the third quarter. In addition, the retail investing platform also reported that net revenue was up 14% from Q2 to $361 million. Robinhood also stated that it added 60,000 accounts to end the third quarter 22.9 million, which is in line with its 22.95 million expectations.
Robinhood’s third-quarter performance was enough to send its stock up 4.6% in after-hours trading following the report. Before this, company shares were on an 8-day winning streak, gaining 20% through Tuesday, eventually falling 4% in regular trading Wednesday.
Riskier Assets on the Decline?
After seeing its stock benefit from the meme frenzy that characterized the first half of 2021, Robinhood’s shares are down 38% in 2022. This is a result of the broader decline in riskier assets such as the stock market and crypto. Since the turn of 2022, digital currencies have generally remained sluggish in growth, which is once again reflected in Robinhood’s 12% slide in crypto trading. However, the company’s chief financial officer Jason Warnick remains upbeat that things will eventually pick up again. He further suggested that Robinhood will keep a close eye on the crypto situation to take advantage when things improve. According to Warnick:
“It’s a quieter time for crypto. It’s a moment where we’re just continuing to invest in the space, to make sure that we’re well-positioned for when this turns around.”
Robinhood has a standalone wallet app on the Apple Store. The Robinhood Wallet facilitates crypto trading and swapping among users without network fees. The app was initially launched via Polygon, with plans to integrate other networks in the future.
Warnick stated that Robinhood’s crypto activity may have picked up again in the past week. This could be a reference to the rise of Dogecoin (DOGE) in the past week and by extension, Elon Musk’s successful takeover of Twitter. Musk is an avowed DOGE devotee.