Robinhood Markets, Inc. (NASDAQ: HOOD) shares tumbled in pre-market trading on Wednesday after the company posted disappointed revenue figures for the third quarter.
The online brokerage reported net revenue of $467 million, falling short of the $478.9 million analyst estimate. This decline comes as lower cryptocurrency trading volumes weighed down its transaction-based revenue.
Transaction-based revenues took a substantial hit, plummeting 11% year-on-year to $185 million. This was mainly due to a 55% drop in crypto notional volumes over the year, according to a statement released by Robinhood on Tuesday.
However, it’s not all doom and gloom for the company, as the loss in the quarter narrowed significantly to 9 cents per share, compared to a loss of 20 cents per share in the same period last year. Meanwhile, Robinhood’s Monthly Active Users (MAU) saw a worrying decline of 16%, down to 10.3 million.
This follows closely after Robinhood’s co-founder and Chief Creative Officer Baiju Bhatt sold around 20% of his ownership in the company in October, prompting concerns about the leadership’s faith in the company’s prospects.
Nevertheless, Robinhood’s management is maintaining a positive outlook on its future. The company unveiled expansion plans, including the imminent launch of brokerage operations in the United Kingdom and cryptocurrency trading services in the European Union.
Robinhood Markets, Inc. (NASDAQ: HOOD) has also extended its offerings in the third quarter as the company aims to cater to a broader market. The company now provides 24-hour trading for 95 stocks and offers a 1% match for IRA deposits, with benefits increasing to 3% for its gold members.
Robinhood CEO Vlad Tenev has expressed optimism about the future, saying,
“Looking ahead, we remain focused on providing industry-leading products that serve far more of customers’ financial needs, gaining market share, expanding internationally, and continuing to change the industry for the better.”
Still, investors appear cautious about Robinhood’s prospects, given that some critics have previously raised concerns about the suitability of Robinhood’s IRA products for younger investors who primarily joined the platform for speculative trading. Though Robinhood’s shares have gained 15% year-to-date due to the recent cryptocurrency rally, a downturn in crypto prices could potentially send HOOD shares plummeting once again.
Robinhood stock was down 8.81%, trading at $8.90 in the pre-market trading on Wednesday.