FOMO, Memes, and Crypto Supercharge Robinhood to Record Earnings (Up 44.30% YTD)

Well three years after literally stabbing its loyal customers in the back, leaving degenerate traders saying “Et Tu Brute?”, Robinhood is still riding high on the business of legal gambling trading. 

(Source: Giphy) 

You see, apparently fear of missing out can solve trust issues as the summer rally had every Tom, Dick, and Harry piling their Robinhood accounts in hopes of getting rich (skyrocketing the companies equity trading volume and option contracts by 57% and 38%, respectively). 

(Source: PYMTS)

And now with a Q2 revenue of $682 million, not only did Robinhood beat expectations, but it actually grew a massive 40% from last year - proving that their app is the cuisine of choice for retail traders as Gold subscribers increased 61% year-over year to 1.98 million. 

On the other hand, while Wall Street was picking their jaws off the floor with this impressive revenue growth, Robinhoods earnings per share also kicked analysts in the teeth as it clocked in at 21 cents (analyst predicted 15 cents). So yeah, it’s obvious that Robinhood clearly had a stellar quarter.

Ironic eToro Gif (Source: Giphy)

However, with that said, Wall Street Logic 101 still came into play as the stock dipped after the earnings release. Why? Three words: Meme Stocks and Crypto aka, the black sheep of all things “sophisticated investing”. 

(Source: Market Watch) 

As we all know, the return of the GameStop king himself, Roaring Kitty (Keith Gill), had everyone from your Uber driver to your grandma's Uno club YOLOing into GameStop and Chewy's this summer. In addition, Robinhood’s crypto trading boomed 137% thanks to some love from the SEC, as they officially decided to join the 21st century and approve crypto ETFs. 

(Source: Silicon Angle)

So given these two factors, Wall Street and its boomer audience are still giving Robinhood the side-eye, wondering if this was just a one-off event, or if Robinhood’s degenerate consumers are in it for the long haul. And now, with the recent global sell-off in the rearview mirror, this has just amplified concerns for Robinhood even more.

 

(Source: Imgflip)

Of course, Robinhood’s backstabbing CEO, Vlad Tenev, is still optimistic, brushing off concerns about a potential economic slowdown like dandruff on a black sweater. According to him, Robinhood will continue to succeed regardless of what the market does and regardless of who’s in the White House next year. Translation: "Ken Griffin’s got my back yo."

(Source: Franknez) 

Now on the contrary of my sarcastic remarks, Robinhood isn’t just resting on its trading laurels. The company has definitely shown it’s willingness to adapt in order to make the game of trading even more risky for its consumers - like, expanding into credit cards for instance. See: Taking margin to a whole new level. 

(Source: Fortune) 

In addition to their conquest into credit cards, they are also inching their way into retirement accounts (oh lord), and wealth management (double oh lord). Plus, with their recent double down on crypto with their $200 million acquisition of Bitstamp, they are clearly trying to become the jack of all trades within financial apps. 

(Source: Forbes) 

Which to be completely honest, is actually proving to be worthwhile for the company, as Robinhood’s stock is up 44.30% YTD. So it’s evident that they are doing something right… but still, the reason for the future outlook being murky still comes down to consumer seasonality.

It’s easy to bring in new subscribers and trading activity based revenue (surging 69% in Q2) when the market is printing money hand over fist. However, it’s a whole other story when the market is stalling out due to economic headwinds and uncertainty.

(Source: Giphy) 

Now only time will tell if this is really the case for Robinhood going into next quarter’s earnings, but for now, it’s clear that while impressed, Wall Street is left with mixed feelings.

(Source: Giphy)

So, in the end, you know the drill, watch out for Robinhoods stock. The company is definitely soaring over the long term, and this week’s dip may just be a small blimp when looking at the bigger picture - especially after its bone crushing earnings report. 

At the time of this writing Robinhood is up +3.56% on the day (up 44.30% YTD)

Stocks.News holds positions in Robinhood Markets Inc. as mentioned in the article.