Jan 27, 2022 - Economy

Robinhood users disengage

Robinhood transaction revenues, by quarter
Data: Company reports; Chart: Thomas Oide/Axios

Interest in using Robinhood continues to drop off as the stock market roils and competition for traders grows fiercer.

Why it matters: The real test is yet to come for the company at the heart of the meme-stock frenzy in the first half of last year.

  • Not only have legacy players like TDAmeritrade become more tech saavy, companies like PayPal and Revolut are also making it a part of their financial super apps, aimed at taking over the entire consumer's wallet.

Driving the news: Robinhood on Thursday reported that it had 17.3 million monthly active users in December 2021 — an 8% decrease from 18.9 million in September.

  • Between the second and third quarter, Robinhood lost 11% (2.4 million) of its monthly active users.
  • And while Robinhood has grown its active user base by nearly 50% from 11.7 million users since December 2020, the average revenue it makes per user decreased by 39% over the same period to $64 from $106.

What they're saying: "We expect that our growth will continue to come in waves with periods of both outsized and slower growth, much of it linked to product launches, geographic expansion and, of course, market factors," CEO Vlad Tenev told investors.

  • The company said it plans to expand in 2022 by launching into international markets and offering tax-advantaged accounts, among other goals.

What to watch: The big picture question for impatient public market investors is: Will these product launches noticeably bolster revenue next year, or will results come in say 2023?

  • The first six months of the year "are going to be difficult as they try to ramp up these new products," Nicholas Lucas, an associate on the FinTech Equity Research team at Mizuho, tells Axios.
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