Robin Hood (HoodThe stock has been in a downtrend since its IPO in July last year. The financial services company, which aims to “democratize finance for all,” recently produced a file Poor earnings report for the first quarter of 2022.
Amid Robinhood’s financial troubles, fund YouTube channel host and retailer Matt Kohrs He thinks the outlook is bleak for the company’s stock.
“At least from the retail community, which I’m happy to be a member of, I don’t really think sentiment has changed, I mean, it’s a rubbish fire for a situation,” Cohrs Yahoo Finance Live said. “I mean, in 2021, they were able to put $3.7 billion in a hole, flood it with gasoline, and set it on fire. And they don’t seem to really change course, where we start in 2022.”
Kohrs joined Yahoo Finance Live to discuss Robinhood’s quarterly earnings and why retailers are leaving the platform. The company posted a larger-than-expected loss for the quarter ended March 31, as total net revenue fell 43% year-over-year to $299 million. The first quarter of 2022 saw the fifth consecutive quarterly decline in Robinhood’s revenue, with a total net loss of $392 million, or $0.45 per diluted share.
The number of monthly active users is also down 10% year over year – a huge blow for Robinhood Payment for Order Flow (PFOF) The business model, which online brokerage has received criticism for in the past. Berkshire Hathaway (BRK-AAnd BRK-BVice Chairman Charlie Munger, an outspoken critic of the PFOF model, likened Robinhood’s financial account to “God legislates justice.”
“I think there’s definitely a leap now,” Cohrs said. “People are giving up Robinhood for other brokerages without commission. But I think there are two main ways to look at this. If we look at the classic fundamental analysis of what’s going on, the monthly active users are down by about 1.4 million, moreover, it’s worse because they also get paid Less per user – lower revenue.
Cohrs noted that the perception of Robinhood by the retail community is key to its users, and thus how its stock performs. Currently, he said, retailers see the platform as “a little more like the mayor of Nottingham” – the unjust tyrant in the Robin Hood story – rather than the titular hero himself.
“There was definitely a Robinhood exodus,” he said. “One of the things that I know has become very popular is public. It is another brokerage without commission. But the difference is that there is no payment for the order flow. As there are retailers learning more and more about what’s going on in terms of market structure… they’re happy to pay a commission, and they understand that [they’re] They pay for transparency, or they go to people who are not involved in paying for the order flow at all.”
Robinhood and Cryptocurrency
Even in terms of cryptocurrency exchange offerings, Robinhood may be falling behind the competition. The company said in its latest earnings report that its crypto transaction revenue fell 39% year-over-year to $54 million, compared to $88 million in the first quarter of 2021.
Although Robinhood Crypto added The ability to buy and sell popular cryptocurrencies such as Shiba Inu (gray dollars), Solana (SOL-USD), assembled (COMP1- US dollars) and polygon (matic dollarIn mid-April, Cohrs thinks it might be too little, too late.
“So even if they are trying to rebrand and really focus on cryptocurrency, they seem to be going very slowly at the burn rate now, as I said, [was] $3.7 billion last year. They already burned another $300 billion in the first quarter. And in fact, feeling it, I don’t see a lot of people. In terms of stocks, options and cryptocurrency, I think there are different brokerages and exchanges that are more trusted than Robinhood.”
Thomas Home is a writer for Yahoo Finance. Follow him on Twitter Tweet embed
Read the latest financial and business news from Yahoo Finance
Read the latest crypto and bitcoin news from Yahoo Finance
Follow Yahoo Finance on TwitterAnd InstagramAnd YoutubeAnd FacebookAnd FlipboardAnd LinkedIn