Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Robinhood posts smaller loss as higher rates boost margin trading business

Published 11/02/2022, 04:14 PM
Updated 11/03/2022, 03:35 AM
© Reuters. The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company's IPO in New York City, U.S., July 29, 2021.  REUTERS/Andrew Kelly

© Reuters. The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company's IPO in New York City, U.S., July 29, 2021. REUTERS/Andrew Kelly

By Mehnaz Yasmin

(Reuters) -Robinhood Inc posted a smaller-than-expected quarterly loss on Wednesday as the brokerage's margin trading business benefited from rising interest rates, while increased volatility in the markets helped its equity and options segments.

Net interest revenue doubled to $128 million for the third quarter as annual margin interest rates jumped to 5.75% for Robinhood (NASDAQ:HOOD) Gold customers and 9.75% for non-Gold customers.

Robinhood Gold is the company's subscription service, which gives investors access to premium features.

"We anticipate Q4 net interest revenues will be up by roughly $25 million from Q3," Chief Financial Officer Jason Warnick said on a post-earnings call.

Trading in options rose 10%, while that in equities was up 7% sequentially as investors repositioned their portfolios to take advantage of rising interest rates.

Those factors helped the company post revenue of $361 million in the three months ended September, comfortably beating estimates of $355 million, while narrowing its net loss to $175 million from $1.32 billion a year earlier.

Stripping off one-time items, Robinhood reported a loss of 20 cents a share, narrower than 31 cents estimated by analysts, according to data from Refinitiv IBES.

Trading in cryptocurrencies, however, fell 12% sequentially to $51 million as a rout in the broader market forced investors to shun other speculative assets. It had surged 860% to $51 million a year earlier.

"This is better than their competitor Coinbase (NASDAQ:COIN), which Robinhood has taken market share from this year," said Michael Ganian, analyst at research firm YipitData.

© Reuters. The logo of Robinhood Markets, Inc. is seen at a pop-up event on Wall Street after the company's IPO in New York City, U.S., July 29, 2021.  REUTERS/Andrew Kelly

The commission-free brokerage also saw monthly active users fall to 12.2 million, sequentially.

A year ago, it reported 18.9 million users when Robinhood's easy-to-use interface made it a hit among young investors trading from home on cryptocurrencies and stocks such as GameStop Corp (NYSE:GME) amid the COVID-19 pandemic.

Latest comments

most corrupt broker out there...HOOD.
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.