Robinhood earnings: Here’s what to expect

Robinhood (HOOD) will report earnings on Tuesday after the closing bell. These are the metrics Wall Street analysts will be expecting for the investing app’s third quarter results, according to consensus estimates compiled by Bloomberg.

  • Adjusted loss per share: 85 cents

  • Revenue: $423.9 million versus

Investors will be paying attention to commentary around the company’s recently announced crypto wallet. CEO Vlad Tenev recently told CNBC more than 1 million people are on the waiting list since announcing the wallet last month. 

Cryptocurrency has becoming increasingly important for the trading platform. More than 60% of Robinhood users traded digital currencies in Q2. Crypto transaction-based revenue for the quarter ballooned to $233 million, compared to just $5 million in the second quarter of last year. 

Investors will also keep an eye out on any commentary about payment for order flow, the model which has enabled zero-commission trades from the likes of Robinhood and other investing apps. 

The U.S. Securities and Exchange Commission (SEC) chair Gary Gensler told Yahoo Finance banning the practice is a possibility.

Gensler said “inherent conflicts” in the payment for order revenue model may incentivize brokerages to gamify stock betting to increase the volume of trading. 

Robinhood has been moving away from payment for order flow as a revenue generator.  

“Over time, as our various products achieve maturity, you should see continued diversification and less reliance on any one revenue stream, such as payment for order flow,” Robinhood CFO Jason Warnick said during the company’s second quarter earnings call.

“We are already seeing promising signs of this in Q2 with payment for order flow for equities and options as a percentage of our revenue, declining the 38% from 64% in the prior quarter as customer interest in crypto increased,” he added.

Investors can expect lower trading activity for the 3rd quarter as the company has warned of “seasonal headwinds” across the industry going into the second half of the year, which could result in “lower revenues and considerably fewer new funded accounts.”

Robinhood went public on the Nasdaq (^IXIC) on July 28th with an IPO price of $38/share. The app was whirled into the GameStop (GME) saga earlier this year as so many retail traders were using Robinhood to execute their orders. Shares were trading around $39 each on Monday.

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