The Charm Fades: Users Leave Robinhood

The trendy brokerage app of GenZ, Robinhood, entered the limelight last year, but now its time in the sun seems to be fading. As shown in Robinhood’s financial results, the first quarter of 2022 has been a far cry from its excellent start to 2021. Robinhood’s 2022 has been further marred by unsettling losses. 

The total net revenue of the investment app decreased by 43% to $299 million over the first three months of the year, compared with $522 million in the year prior, Robinhood said in a press release. 


Double-Digit Losses

The notable decline was mainly caused by a 48% drop in the broker’s revenue from transactions carried out by users. Transaction fees brought in $218 million in revenue for Robinhood, while it generated $420 million in the first quarter of 2021.

Earnings from crypto transactions dropped to $54 million, or 39% lower compared to the $88 million of Q1 2021. Meanwhile, equities decreased by 73% to $36 million, down from last year’s $133 million.


User Numbers Decrease

The Fintech company disclosed another worrying sign in its financial report. Data shows a sharp drop in the number of monthly active users within the first quarter of 2022. The investment app lost 10% of its users, and currently has 15.9 million, while during the same time a year ago it recorded 17.7 million monthly active users.

Robinhood’s average revenues per user also decreased by 62% to $53, from $137 in the first quarter of 2021, the company says.

“The decreases were primarily related to lower transaction-based revenue driven by the current market environment, which had a negative impact on the number of traders and notional trading volumes in all asset classes,” the Robinhood press release stated.

Last year, Robinhood became one of the most popular investment and trading apps among retail users, especially among GenZers, who took their first steps into finance, and used the broker to search for easily accessible investment options. 

Robinhood’s simple and easy-to-use interface made it one of the most attractive options for retail investors, as hundreds of thousands of new users poured their money into digital currencies and trendy meme stocks like GameStop. 

But the increasing energy prices, inflation, war in Ukraine, and strengthening monetary policies in the world’s economies have drastically changed the macroeconomic environment, and therefore investor behavior, a significant number of whom have chosen to wait and steer clear of the volatile markets.

Earlier this month, Robinhood reported its plans to cut the number of full-time employees by nearly 10%. The company employed approximately 3,800 employees as of the last month of 2021.

On the Flipside

  • Despite financial difficulties, the company is working to deliver some major product developments. Last month, it introduced the Robinhood Cash Card, and opened its fully-paid securities lending product ‘Stock Lending’.

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