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In July of final yr, Robinhood (NASDAQ: HOOD) made its market debut within the thralls of the meme inventory saga. Whereas it’s now abundantly clear this was an IPO of alternative, there have been definitely early indicators hidden inside its S-1 and delivered to mild by Rory in his First Look. He labeled Robinhood as an organization “coping with one thing of an existential disaster”, highlighting its branding as a brokerage of the individuals whereas concurrently profiting from them. To not point out, the corporate’s obscene dependence upon Dogecoin.
In its newest quarter, these traits stay distinguished they usually’re beginning to put a damper on income.
How did Robinhood’s earnings name go?
In all equity to Robinhood, it will be arduous to enhance from Q1 2021, when newbies flooded the market and cryptocurrencies popped up like weeds. This has meant all comparable stats look fairly dismal, however there are bigger, extra troublesome traits hidden beneath.
Firstly, account progress has been virtually flat since Q2 2021. In that point, Robinhood has solely added 300,000 funded accounts.
It’s tempting to elucidate this away as a mere pull ahead — perhaps everybody who wished a brokerage account bought one — however different monetary corporations proceed to drag in new customers at a gentle fee. Charles Schwab added 1.3 million new brokerage accounts in the identical interval.
I might argue this demonstrates that the casino-like investing that Robinhood is known for and has inspired is starting to fall out of favor. Simply yesterday, Morgan Stanley calculated that meme-stock merchants had misplaced all the cash they made within the frenzy. Possibly these nonetheless desirous about investing are on the lookout for extra measured, skilled gamers, like Schwab or Vanguard.
In the case of the customers Robinhood already has, issues don’t look nice both…