On Tuesday, stock trading app Robinhood reported its third-quarter results. Unfortunately, it reported a huge revenue miss for the third quarter, as cryptocurrency trading dropped off. Shares of Robinhood dropped 8% in after-hours trading. It hit the public markets this summer, opening at $8 a share. On Tuesday, the company’s stock closed at $39.57 per share.
The company said that, barring any change in the market environment, the headwinds that affected the last quarter will persist into year-end.
For the third quarter of the year, Robinhood’s total revenue came in at $365 million. The company’s revenues rose 35% year over year but were well below the second quarter’s revenue of $565 million. Robinhood posted a net loss of $1.32 billion, or $2.06 per diluted share. In the second quarter, it posted a $502 million loss or $2.16 per share. Share-based compensation expense reached $1.24 billion in the third quarter of the year.
Moreover, third-quarter transaction-based revenue totaled $267 million, with only $51 million coming from cryptocurrency trading. Robinhood’s revenue from crypto trading totaled $233 million in the second quarter. Its crypto revenue in the second quarter was bolstered by the Dogecoin community, with Dogecoin representing a whopping 62% of crypto revenue.
Net cumulative accounts fell to 22.4 million in the third quarter from 22.5 in the second quarter. The number of monthly active users also declined from 21.3 million in the second quarter to 18.9 million in the third quarter.
Even though crypto activity declined, Vlad Tenev, the CEO of Robinhood still supports cryptocurrencies. Tenev outlined his optimism for the firm’s long-term prospects in cryptocurrencies. New products and services built for retail traders in the third quarter will finally enable customers to withdraw and deposit crypto to and from the platform according to Tenev.
In October, Robinhood launched round-the-clock phone support to better serve its customers. Customers have the opportunity to discuss their issues with a customer service representative seven days a week, regardless of holidays.
In the third quarter, options trading contributed $164 million, and equities trading added $50 million to transaction-based revenue.
The average revenue per user dropped by 36% to $65 year over year from $102.
The company expects fourth-quarter revenue no greater than $325 million. Robinhood sees account growth in line with the 660,000 opened in the third of the year.
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