Robinhood loses active users in the fourth quarter, forecasts weak revenue

Stock-trading app Robinhood gave a bleak revenue forecast for the first quarter of 2022 on Thursday as its latest earnings report showed a decline in users.

Shares of Robinhood tanked 15% in after hours trading.

The newly public brokerage anticipates first-quarter revenue of less than $340 million, down 35% compared to 2021.Wall Street’s consensus estimate was for $448.2 million in revenue for Q1, according to FactSet.

Monthly active users fell to 17.3 million last quarter from 18.9 million in the third quarter. This number was also below estimates of 19.8 million, according to FactSet.

Meanwhile, net cumulative funded accounts totaled 22.7 million at the end of the fourth-quarter, about in-line with estimates. This is up from 22.4 million accounts in the third-quarter. To be sure, Robinhood added 10 million accounts alone in 2021.

For the fourth quarter, Robinhood reported a net loss of $23 million, or 49 cents per diluted share, wider than the 45 cent loss estimate collected by Refinitiv. However, Robinhood posted $363 million in revenue in the final three months of 2021, slightly above analysts expectations of $362.1 million.

Robinhood is about to face its toughest comps in the first and second quarters of 2022 following its record year in 2021 from events like the GameStop short squeeze.

Robinhood’s stock is more than 86% off its most recent high since the trading app’s July 2021 public debut. Shares are down more than 34% in January, bringing its market capitalization to less than $10 billion.

Fourth-quarter transaction-based revenue was $264 million. Options trading made up $163 million, cryptocurrency trading added $48 million and equities contributed $52 million to transaction based revenue in Q4.

Revenue from crypto has been declining since the second quarter of 2021. After a banner $233 million in the second quarter of 2021, crypto-based revenue was only $51 million in the third quarter. And Thursday’s report shows its continuing to decline.

Robinhood’s assets under custody rose to $98 billion on an annualized basis. Average revenue per user decreased by 39% to $64 year over year from $106.