Shares of Robinhood Markets Inc. (HOOD) plummeted over 11% in pre-market trading on October 31, 2024, after the popular online brokerage reported weaker-than-expected results for the third quarter of 2024. The company's revenue and key user metrics fell short of analyst expectations, raising concerns about its ability to sustain growth and user engagement.
For the quarter ended September 2024, Robinhood reported revenue of $637 million, missing consensus analyst estimates of around $658 million. While the company's earnings per share of $0.17 were in line with expectations of $0.18, the revenue miss and disappointing monthly active user (MAU) figures overshadowed this.
Robinhood reported 11 million MAUs for Q3, significantly lower than the 12.3 million expected by analysts. This marked a slowdown in user growth for the popular trading app, which has been riding a wave of increased retail investor activity in recent years. In a call with media, Robinhood CFO Jason Warnick attributed the revenue miss to analysts not properly accounting for "contra revenue" related to the company's promotions and incentives for new account openings.
The disappointing results and slowing user growth raised concerns among investors about Robinhood's ability to sustain its momentum and continue attracting and retaining users in an increasingly competitive landscape. The stock's sharp sell-off reflects the market's concerns about the company's future prospects, particularly as it faces challenges in maintaining user engagement and monetization.
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