The publicly-listed provider of retail trading solutions, Robinhood Markets (NASDAQ:HOOD), has shown a mixed bag of January 2023 operating data, reporting a significant decrease on a yearly basis, with a visible rebound when compared to December 2022.
Robinhood Reports Important Trading Metrics
The monthly active users (MAU) base has contracted 31% year-over-year (YoY) from 17.3 million to 12 million. However, the number of active users rose by 600,000 from 11.4 million reported a month earlier.
Similar correlations apply to the vast majority of other reported statistics. The total worth of assets under custody (AUC) also declined like MAU on an annualized basis and was down 14% from $86.8 billion to $74.7 billion. However, AUC rebounded by 20% monthly from $62.2 billion.
In terms of trading volumes, cryptocurrencies were the strongest fallers, losing 59% YoY to $3.7 billion. On the other hand, they recorded the most substantial monthly rebound and are up 95% from the $1.9 billion reported in December 2022. Shares fell 24% YoY from $60.5 billion to $46 billion, rising 19% from the $38.6 billion level reached a month earlier.
"Notional Trading Volumes – which are the primary driver of transaction revenues – were higher in January for equities, options, and crypto from December 2022. Equities were $46.0 billion (up 19%), Options contracts were 82.9 million (up 10%), and Cryptocurrencies were $3.7 billion (up 95%)," Robinhood commented in the statement.
Daily Average Revenue Trades (DARTs) show similar outcomes: crypto DARTs fell by 36% YoY while rising 37% monthly. Equity DARTs slid 21% YoY and rose 3% compared to December 2022.
The latest financial data released by Robinhood on Wednesday boosted the NASDAQ-listed stock price during yesterday's session. Ultimately, HOOD closed the day with a gain of almost 6% at $10.63 per share. That does not change the fact that the stock has lost almost 70% since its IPO in July 2021.
Robinhood’s Q4 Revenues Also Mixed
A week ago, Robinhood announced its financials for the fourth quarter of 2022, with a 5% increase in total net revenue to $380 million, despite an 11% decrease in transaction-based revenues to $186 million.
Cryptocurrency trading revenues were the hardest hit, shrinking from $39 million to $24 million. It was the second consecutive quarter of declines in the three months that ended on 30 September 2022, cryptocurrency trading was 12% less profitable.
Additionally, revenue from equity trading shrank to $21 million, which is down 32%. On the other hand, revenue from options trading remained flat at $124 million. Finally, positive total net revenue was provided by solid growth in net interest revenue, which amounted to $167 million, increasing by 30%.
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SBF Stocks Buyback and Shareholder Lawsuit
Meanwhile, the company's board approved the repurchase of 55 Robinhood shares owned by an entity controlled by Sam Bankman Fried (SBF), Emergent Fidelity Technologies, acquired in May 2022. SBF held a 7.6% stake in Robinhood after the transaction, spending $648 million on the deal. The recent findings indicate that the funds for the share purchase came from a direct loan from another SBF-owned company, Alameda Research.
This week, a US judge dismissed a lawsuit against the company accusing it of misleading investors during its 2021 initial public offering (IPO). Judge Edward Chen of the US District Court in San Francisco found no evidence that the information published by Robinhood in its prospectus and disclosure materials was incorrect, false or misleading. Instead, investors alleged that key financial metrics depicting the company's health fell sharply moments before the IPO, exposing them to financial losses.
Furthermore, Robinhood has decided to abandon its plan to acquire Ziglu, a London-based crypto portfolio investment company, which it initially announced in April 2022. As a result, Mark Hipperson, the Founder and CEO of the company, has decided to give up his role.
