Shares of Robinhood Markets (HOOD.US) are trading 9% lower in premarket today. The drop is a response to the company releasing its third quarter earnings report yesterday after the close of the session. Report can be best described as mixed. Let's take a quick look at the release!
Sales disappoint, profit beats expectations
Q3 earnings report from Robinhood turned out to be mixed - company disappointed with net revenue while adjusted EBITDA turned out to be better than expected. While company reported loss per share of $0.09, it should be said that net result was negatively impacted by $0.11 per share charge from regulatory accrual. Company also disappointed when it comes to trading volume with transaction-based revenue missing estimates significantly. Transaction-based revenue was pressured by 55% YoY lower notional value of crypto trading during the quarter. On top of that, Robinhood reported a much lower number of monthly active users than expected.
Company plans to expand in Europe
Robinhood Markets had a rather poor Q3 and the outlook for Q4 is not too bright given declining user engagement. However, company plans to expand its operations in new markets in order to revive user growth. Company said that it plans to launch brokerage operations in the United Kingdom as well as crypto trading operations in Europe in the coming weeks. Nevertheless, those announcements failed to offset a general weakish feeling of the report and prevent company's shares from dropping.
Q3 2023 results
- Net revenue: $467 million vs $478.9 million expected (+29% YoY)
- Transaction-based revenue: $185 million vs $199.4 million expected (-11% YoY)
- Crypto revenue: $23 million vs $28.3 million expected
- Net Interest revenue: $251 million vs $253.2 million expected
- Other: $31 million vs $26.6 million expected
- Adjusted EBITDA: $137 million vs $132.4 million expected
- Net loss: $85 million
- Loss per share: $0.09
- Net cumulative funded accounts: 23.3 million vs 23.3 million expected
- Monthly active users: 10.3 million vs 10.8 million expected
- Average revenue per user: $80 vs $82.3 expected
- Assets under custody: $87 billion vs $90.9 billion expected
Full-2023 forecasts
- Operating expenses: $2.40-2.44 billion, up from previous guidance of $2.33-2.41 billion
A look at the chart
Taking a look at Robinhood Markets chart (HOOD.US), we can see that the stock is expected to launched today's trading with a big bearish price gap. Stock is seen dropping back to the $8.85 support zone. If stock opens in-line with current premarket quote it would mean dropping to the lowest level since early-June 2023. Clearing the $8.85 support would pave the way for a test of the next support zone in-line, which can be found in the $8.30 area.
Source: xStation5
