The Robinhood (HOOD) stock has been on a downward trend since its listing in July last year. The finance company, which aims to “democratize finance for all”, has also recently made a poor earnings report for the first quarter of 2022.
In the midst of Robinhood’s financial problems, YouTube channel host and retailer Matt Kohrs believes the outlook is bleak for the company’s shares.
“At least from the retail community, of which I am a happy member, I do not really think the feeling has changed, I mean, it’s a rubbish dump of a situation,” Kohrs told Yahoo Finance Live. “I mean, in 2021[ads1], they managed to throw $ 3.7 billion into a pit, flush it with gasoline and light it. And it seems like they’re not really changing course when we start 2022.”
Kohrs joined Yahoo Finance Live to discuss quarterly revenue for Robinhood and why retailers are leaving the platform. The company posted a larger-than-expected loss for the quarter ended March 31, when total net income fell 43% year-on-year to $ 299 million. The first quarter of 2022 marked the fifth quarterly decline in revenue in a row for Robinhood, with a total net loss of $ 392 million, or $ 0.45 per diluted share.
Active users per month also fell by 10% from year to year – a big hit for Robinhood’s business model for payment for order flow (PFOF), for which the online brokerage house has previously been criticized. Berkshire Hathaway (BRK-A, BRK-B) Deputy Charlie Munger, an outspoken critic of the PFOF model, compared Robinhood’s financial bill to “God who justifies”.
“I think it’s definitely a jump now,” Kohrs said. “People are dropping Robinhood for other commission-free brokerage houses. 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, their monthly active users fell quarterly by about 1.4 million, and on top of that, it’s worse because they also get less money per user – revenue drops. “
Kohrs noted that Robinhood’s perception of the retail community is central to the user community and, consequently, how the stock performs. And right now, he said, retailers are looking at the platform being “a little closer to the Sheriff of Nottingham” – the unjust tyrant in the Robin Hood story – instead of the titular hero himself.
“It’s definitely been an exodus from Robinhood,” he said. “One of the ones I know is starting to become very popular is Public. It is another commission-free brokerage. But the difference is that there is no payment for order flow. As retailers are learning more and more about what is happening in terms of market structure De they are happy to pay a commission, and understand that [they’re] pay for transparency, or they go to those who just do not pay for order flow at all. “
Robinhood and cryptocurrency
Even when it comes to cryptocurrency exchanges, Robinhood can fall behind the competition. The company reported in its latest earnings report that their transaction revenue from cryptocurrency fell 39% year over year to $ 54 million, compared to $ 88 million in the first quarter of 2021.
And although Robinhood Crypto added the ability to buy and sell popular cryptocurrencies such as Shiba Inu (SHIB-USD), Solana (SOL-USD), Compound (COMP1-USD) and Polygon (MATIC-USD) in mid-April, Kohrs it may be too little, too late.
“So even though they’re trying to rebrand and really focus on crypto, it seems like it’s going a little too slow at their burning rate right now, like I said, [was] $ 3.7 billion last year, he said. “They have already burned another $ 300 billion this first quarter. And really, the feeling of it, I just do not see many people. When it comes to stocks, options and crypto, I think there are different brokerages and exchanges that are more reliable than Robinhood. . »
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV
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