On April 28, Robinhood Markets Inc. (HOOD) posted earnings for the first quarter of 2022. Shrinking revenue and fewer active users had investors worried for the company. Consequently, the stock fell to new lows in the after-hours following a steep decline of 11.40%. At a volume of 4.53 million shares, HOOD was trading at a price of $8.94 in the late trading session.
This decline came after an increase of 6.10% in the earlier session which had the stock trading at $10.09 a share.
HOOD’s Earnings Analysis
The company’s earnings were a clear picture of the uncertain times that the market is currently going through. The Russian invasion of Ukraine, geopolitical tensions, inflation, and rising interest rates have users cautious about investments.
For the first quarter of 2022, the company posted total revenues of $299 million while analysts were expecting $355.8 million. The total revenues marked a stark decline of 43% YOY from the year-ago quarter.
Moreover, declining over 39% YOY were its cryptocurrency revenues also missed analysts’ expectations. The reported crypto revenue was $54 million against the expected $56.1 million.
HOOD’s net loss was also wider-than-expected as it incurred a loss of $392 million or $0.45 per share. Comparatively, analysts were looking forward to a loss of $0.36 per share for the quarter.
On top of this, the MAUs fell by 10% to 15.9 million for the quarter ended March 2022.
What is Happening?
In 2020 and 2021, crypto saw a boom as it became the new buzzword. Investors were flocking like crazy towards it as it reached new all-time highs. Not just crypto but trading was at a boom on the whole as meme stocks rallied big. But the current geopolitical instability and ongoing challenges like inflation and higher interest rates have people worried for their money and investments. High-risk assets like crypto are struggling this year. Prices have become more stagnant and trading is more in lower regions with a focus on defensive sectors.
Even if it weren’t for the growing instability, no market could sustain the wild growth of crypto in long term.
Crypto and HOOD: Where do they stand in the future?
While crypto prices have become more stable with not much growth, the times have changed. The industry is a lot more established now with the crypto market cap of nearly $1.8 trillion today. Additionally, from a niche investment, crypto has evolved into a globally established asset class with more and more financial institutions opening their doors for crypto. Thus, in the long run, crypto will continue to burn its coals as it is up for much future growth.
On the other hand, HOOD as well is poised for much growth in the long run as it has much in store. With the release of a crypto wallet to all customers, new coins, Ziglu acquisition, and a suite of new products slated for launch, the company sees a bright future.
