Robinhood shares tank as revenue falls way short of expectations on lighter crypto trading

Stock trading app Robinhood reported a huge revenue miss in the third quarter as cryptocurrency trading dropped off.

And Robinhood said barring any change in the market environment, the headwinds that dragged down last quarter like lower retail trading activity will persist into the end of the year.

Shares of the newly public company tanked by 8% in after hours trading on Tuesday.

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For the third quarter, total net revenue came in at $365 million, missing estimates of $431.5 million, according to Refinitiv. Revenues increased 35% year-over-year but were well below the second quarter's revenue of $565 million, which was bolstered by a massive surge in crypto trading.

Third quarter transaction based revenue totaled $267 million, with only $51 million coming from cryptocurrency trading. Revenue from crypto trading totaled $233 million in the second quarter.

Options trading contributed $164 million and equities trading added $50 million to transaction based revenue.

Robinhood said it expects fourth quarter revenue no greater than $325 million. The company sees account growth in line with the 660,000 opened in the third quarter of 2021.

"For the three months ending December 31, 2021, we anticipate that many of the factors that impacted our third quarter results, such as seasonal headwinds and lower retail trading activity, may persist," the company said in a press release.

Net cumulative accounts dropped to 22.4 million from 22.5 million in the second quarter. Monthly active users totaled 18.9 million, compared to 21.3 million in the second quarter.

Average revenue per user decreased 36% to $65, compared with $102 in the third quarter of 2020.

Robinhood reported a net loss of $1.32 billion, or $2.06 per share. Wall Street was expecting a loss of $1.37 per share, according to Refinitiv.

"This quarter was about developing more products and services for our customers, including crypto wallets," said Vlad Tenev, CEO and Co-Founder of Robinhood Markets. "More than one million people have joined our crypto wallets waitlist to date."

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