Robinhood Markets Inc.’s
HOOD -6.45%
inventory fell 14% in premarket buying and selling after the brokerage reported a lack of $423 million for the fourth quarter.
The corporate had a rise in know-how and administrative bills that ate into its outcomes.
The brokerage utilized by particular person buyers recorded income of $363 million for the October-through-December interval, a rise of 14%.
For the 12 months, Robinhood recorded an 89% bounce in income to $1.82 billion, up from $959 million the earlier 12 months. The corporate’s web loss totaled $3.7 billion for the 12 months.
Robinhood’s outcomes missed analyst expectations. Analysts polled by FactSet anticipated fourth-quarter income of $376 million and a web lack of $225 million.
The brokerage in 2021 skilled momentum in its choices and cryptocurrency buying and selling enterprise, as particular person buyers dabbled in riskier and extra speculative buying and selling methods. However within the fourth quarter, the corporate mentioned, income tied to inventory buying and selling fell 35% to $52 million from $80 million.
In distinction, income tied to clients’ choices buying and selling rose 14% to $163 million.
Robinhood turned a darling of the Covid-19 period, as tens of millions of recent buyers started attempting their hand at buying and selling. The brokerage now has 22.7 million clients, it mentioned Thursday, up from 12.5 million in 2020.
The corporate faces stiff competitors. Asset managers similar to Constancy Investments and
BlackRock Inc.
have used their scale to extend income even whereas chopping charges. They’ve additionally centered on including merchandise with increased charges.
Robinhood began the primary half of 2021 in a robust place as tens of millions of buyers entered the market to commerce meme shares similar to
GameStop Corp.
and cryptocurrencies similar to dogecoin. But because the 12 months went on, it was laborious to maintain the momentum. The corporate skilled a slowdown in income tied to clients’ buying and selling. Income tied to cryptocurrency buying and selling was significantly laborious hit within the third quarter.
The brand new 12 months hasn’t offered aid, with buying and selling persevering with to fall, the corporate mentioned.
Robinhood lowered its income expectations for the primary quarter to lower than $340 million, which, on the prime finish can be a 35% decline.
Jason Warnick,
Robinhood’s chief monetary officer, mentioned in a name with the media that buying and selling exercise has picked up in current days.
Mr. Warnick mentioned the corporate is planning to roll out merchandise that target longer-term investing. He mentioned the corporate expects to start introducing tax-advantaged retirement accounts midyear and that there’s a chance to increase internationally—significantly within the cryptocurrency house.
The corporate began rolling out cryptocurrency wallets this month to some clients, he mentioned. The transfer permits clients to maneuver their crypto holdings out and in of the Robinhood app.
Shares sank in after-hours buying and selling after ending Thursday at $11.61, down 6.5% from Wednesday’s shut. Robinhood’s inventory has been punished these days as buyers rotate out of progress firms that had been well-liked final 12 months. Based mostly on Thursday’s shut, Robinhood has misplaced 69% from its preliminary public providing worth of $38 a share.
Write to Caitlin McCabe at caitlin.mccabe@wsj.com
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Appeared within the January 28, 2022, print version as ‘Robinhood Posts Loss, Sending Inventory Into Nostril-Dive.’
