Like the majority of players in the crypto market, Robinhood is in financial trouble. A direct consequence of bear market that the diversification of its service offer does not seem to alleviate for the moment.
A real poor performance for Robinhood!
The bear market effects on Robinhood are getting bigger and bigger. In the fourth quarter, the company’s profits, linked to fees collected on crypto transactions fell 24% to $39 million. This figure is well below the $51 million expected at the end of the fiscal year.
Moreover, it represents only part of the net losses recorded by the company over the period. These amount to $166 million. A result substantially higher than the forecast loss, ie 131 million dollars.
This result is largely attributable to the decline in the number of platform users. For the month of December 2022 alone, these fell by 800,000 to reach 11.7 million compared to 12.5 million in November. A major bleeding that the company wants to stop as soon as possible.
What measures to right the boat?
If this situation is to continue, Robinhood will not recover. Its leaders are aware of this. It is for this reason that they are considering the buyback, in part or in full, of the 55 million shares sold in May to Emergent Fidelity Technologies.
About a week ago, the company co-founded by former FTX boss Sam Bankman-Fried filed for bankruptcy. But the acquisition of its shares remains unlikely.
“As there is little precedent for this type of situation, we cannot predict when, or if, the stock purchase will take place. We will provide updates as appropriate,” Robinhood said in a statement.
The leaders are betting mainly on reducing the company’s operating expenses. The transaction will involve the cancellation of approximately $500 million in stock compensation. Officials, however, did not say whether this policy would extend to its staff. They will nevertheless have to optimize their service offer to generate profits.
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