Robinhood beats revenue estimates as rate hikes bolster interest income By Reuters

© Reuters. FILE PHOTO: 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/File Photo

By Manya Saini

(Reuters) -Robinhood Markets Inc blew past Wall Street estimates for first-quarter revenue on Wednesday, as the U.S. Federal Reserve’s rapid rate hikes boosted the online brokerage’s interest income.

Shares of the company, which was at the center of 2021’s retail trading frenzy, rose 4% in extended trading after Robinhood (NASDAQ:) also said it will launch 24-hour trading for five days a week.

Fed’s aggressive monetary tightening to curb stubborn inflation helped Robinhood partially offset a slump in its mainstay retail trading arm, which saw customer engagement dwindle over the past year amid market volatility.

Net interest revenue came in at $208 million in the first quarter ended March 31, compared with $55 million a year earlier. Robinhood allows eligible customers to borrow money to purchase securities and charges an interest on the debt.

Meanwhile, monthly active users decreased to 11.8 million, compared with 15.9 million a year earlier.

Chief Financial Officer Jason Warnick on a call with reporters said that while active users declined from last year, the number has “stabilized a bit” compared to the previous quarter.

“The broader macro backdrop has been tougher on trading volumes and engagement with brokerages,” he added.

Retail traders, popularly known as mom-and-pop investors, used Robinhood’s platform through most of 2021 to pump money into so-called meme stocks, driving the company’s frenzied growth and drumming up trading volumes.

The levels have since tempered as Americans grapple with worries of an economic slowdown. Transaction-based revenue declined 5% in the reported quarter to $207 million from last year.

The Menlo Park, California-based company reported revenue of $441 million, compared with $299 million a year earlier. Analysts on average had expected $424.53 million, according to Refinitiv IBES data.

Loss in the quarter came in at 57 cents per share, below estimates of a loss of 61 cents per share.

by : Reuters

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