The stock trading app Robinhood Markets Inc (NASDAQ:HOOD). HOOD reported its first quarterly report after going public last month, wherein it reported a huge loss for the second quarter. It incurred net loss of $2.16 per share against earnings of 9 cents in the year-ago quarter. A big chunk of the loss was attributable to an accounting issue due to a change in fair value for convertible notes and warrant liability, according to the company.
Revenues soared 131% year over year to $565 million driven by boom in cryptocurrency trades. Most of the growth was driven by 140.7% increase in transaction-based revenues (generated by selling users' stock, options and cryptocurrency trades to market makers who execute the orders). And more than half of the transaction-based revenues came from crypto trading, which totaled $233 million. Transaction-based revenues accounted for nearly 80% of total revenues in the second quarter (read: ARK Invest Preparing to Launch Bitcoin ETF).
Monthly active users more than doubled to 21 million from the 10.2 million in the year-ago quarter.
Robinhood warned of lower revenues for the third quarter, citing seasonal headwinds and lower trading activity. The third quarter is typically seasonally weaker for the stock that leads to "lower trading activity across the industry" as well as "lower revenues and considerably fewer new funded accounts than in the prior quarter."
Market Impact
Following the warning in trading activity, shares of Robinhood fell more than 8% in aftermarket hours and about 12% in pre-market today. This suggests some rough trading for the stocks and its ETFs (read: Invest in Robinhood With These ETFs).
Below, we have highlighted four ETFs that have fast filled this stock trading app in their portfolio and will be in focus in the days ahead:
Ark Innovation ETF ARKK
This is an actively managed fund investing in companies that benefit from the development of new products or services, technological improvements and advancements in scientific research. In total, the fund holds 49 securities in its basket with Robinhood accounting for 1.1% share. The fund charges 75 bps in annual fees and trades in an average daily volume of 7.1 million shares. It has AUM of $22.1 billion.
ARK Fintech Innovation ETF ARKF
This ETF invests in a company having the theme of Fintech innovation. The Adviser defines Fintech innovation as the introduction of a technologically enabled new product or service that potentially changes the way the financial sector works, which ARK believes includes transaction innovations, blockchain technology, risk transformation, frictionless funding platforms, customer facing platforms and new intermediaries. The ETF holds 46 stocks with Robhinhood currently making up 0.9% of the assets. The fund charges 75 bps in annual fees and trades in an average daily volume of 1.1 million shares. It has managed assets worth $3.7 billion.
ARK Next Generation Internet ETF ARKW
This is an actively managed fund focusing on companies that are expected to benefit from the shift in technology infrastructure to the cloud, enabling mobile, new and local services. The fund holds 47 stocks in its basket with HOOD taking 0.8% share. The ETF has amassed $5.8 billion in its asset base and charges 79 bps in annual fees. It trades in an average daily volume of 844,000 shares.
Renaissance IPO ETF IPO
This fund provides exposure to the largest and most-liquid, newly listed companies by tracking the Renaissance IPO Index. The fund currently holds 74 stocks in its basket with Robinhood making up for 0.5% share. The fund has amassed $507 million in its asset base while it trades in a good volume of about 259,000 shares. The product charges 60 bps in annual fees (read: 2021 to be a Record Year for IPOs? ETFs in Focus).
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ARK Next Generation Internet ETF (ARKW): ETF Research Reports
Renaissance IPO ETF (IPO): ETF Research Reports
ARK Innovation ETF (ARKK): ETF Research Reports
ARK Fintech Innovation ETF (ARKF): ETF Research Reports
Robinhood Markets, Inc. (HOOD): Get Free Report
To read this article on Zacks.com click here.
Zacks Investment Research