Shares of Robinhood Markets Inc. fell after hours on Tuesday after the trading app reported revenue that missed expectations, as benefits from higher interest rates ran up against a drop in active users and muted trading activity.
also said it planned to launch a brokerage in the U.K. and crypto trading in the European Union “in the coming weeks.”
The company reported a third-quarter net loss of $85 million, or 9 cents a share, compared with a loss of $175 million, or 20 cents a share, in the same quarter last year. Sales rose to $467 million from $361 million in the prior-year quarter.
Analysts polled by FactSet expected a per-share loss of 10 cents, on revenue of $480 million.
Net interest revenues jumped 96% to $251 million, helped by gains in interest-earning assets and higher interest rates overall. Robinhood earns interest revenues on things like margin loans to users and corporate cash.
But equities-trading revenue fell 13% to $27 million, while revenue from crypto trades tumbled 55% to $23 million. Options revenue was unchanged at $124 million. Monthly active users fell 16% to 10.3 million.
Shares slid 7% after hours on Tuesday. Still, the stock is up around 20% so far this year, amid a broader market recovery.
Robinhood over the years has tried to offer more investment services for retail traders, expanding into crypto, IRAs and all-day trading. It also has ambitions to expand abroad. But even as markets rebound, monthly active users have largely trended lower over the past year, as the impacts of pandemic stimulus payments and 2021’s meme-stocks craze fade.
Robinhood also faces concerns about the return of student-loan payments after a pandemic-era pause and the impact of higher interest rates on borrowing, investing and spending.
Chief Executive Vlad Tenev, during a conference in September, said that nearly half of the company’s assets under custody were in accounts of people over the age of 40. And he said older customers “tend to put significant assets on the platform.”
He also said focusing on active or sophisticated traders, via products like Robinhood Gold — a service that offers extra data and 4.9% interest on uninvested brokerage cash — and retirement services has helped as rates rise.
Robinhood in September disclosed that it had spent more than $600 million to buy back shares the government seized from Sam Bankman-Fried, the founder of the crypto exchange FTX.
FTX imploded last year, leading to Bankman-Fried’s conviction this month on multiple counts related to fraud that cost customers billions of dollars. Bankman-Fried originally acquired the shares via Emergent Fidelity Technologies.