September 26, 2023

SAN FRANCISCO – Robinhood, the stock trading app, reported rising quarterly earnings on Wednesday as pandemic trading became a lingering hobby for many customers but was still losing money.

In its first earnings report as a publicly traded company, Robinhood said sales climbed to $ 565 million in the second quarter, 131 percent more than the same period last year.

It also lost $ 502 million, compared to a profit of $ 58 million last year. The company attributed a significant portion of that loss to shares issued in compensation to employees and warrants from an emergency funding round it picked up that year.

Vlad Tenev, CEO of Robinhood, said in a statement that he was “encouraged” by the number of people trading Robinhood stocks for the first time. The company reported 22.5 million user accounts with credit, an increase of 130 percent from 9.8 million for the same period last year.

A significant portion of Robinhood’s growth in the quarter also came from cryptocurrency trading after the price of Bitcoin and other cryptocurrencies hit record highs in the spring. Revenue from cryptocurrency trading fees was $ 233 million, a nearly 50-fold increase from $ 5 million last year. More than 60 percent of its customers traded cryptocurrencies in the quarter, and more new customers used the app to trade cryptocurrencies than stocks, according to the company.

Robinhood’s IPO in July was a disappointment. The company’s stock began trading at $ 38 per share, which was the lower end of a price range suggested by its bankers. Stocks then fell, ending their first day down 8.4 percent.

A week later, individual stock traders began driving the price up, mostly by trading options, a high risk form of trading that Robinhood enables. The company’s shares then rose as high as $ 70.

The rally made Robinhood a “meme stock” of sorts, trading on momentum and sentiment rather than business fundamentals. Robinhood’s business outlook hadn’t changed to affect the sudden surge.

The company’s share price has since settled at around $ 50 per share, which equates to a value of $ 41.8 billion for the company. The share fell on Wednesday in after-hours trading by up to 7 percent.

Robinhood helped boost Meme stocks by facilitating merchants who repeatedly pushed up the prices of aging brick and mortar businesses like GameStop, the video game retailer and AMC, the cinema chain. Robinhood’s mission to bring Wall Street investing to the common people involved option trading and other risky bets, which resulted in some customers recording shocking losses and the anger of those who opted for a more traditional “buy-and-buy” -Hold “investment strategy.

Robinhood incorporated this ethos into its debut in the public market by allocating an unusually large portion of its IPO stock to retail investors through its app and allowing clients to ask questions in its investor pitch and earnings call. That month, $ 140 million was spent to acquire Say Technologies, a company that provides investor question and answer sessions and proxy voting.

But like many Silicon Valley companies, Robinhood has restricted the rights of its shareholders by issuing multiple classes of shares. This structure has given its founders, Mr. Tenev and Baiju Bhatt, voting control of the company.

Before the company released its results on Wednesday afternoon, one of the top questions shareholders asked, with more than 900 votes, was whether investors could get a Robinhood hat and “hoodie”.