Why Robinhood Is Getting Hammered Today – Techdoxx

Deepak Gupta January 28, 2022
Updated 2022/01/28 at 4:57 PM

The 2020-2021 negotiation and the investment boom has boosted revenue growth, fundraising, and storytelling strength for many companies. Some of the best known even went public behind a global trend that made their businesses shine. Now that glow is fading, and the value of some fintechs is in freefall.

The best example of this reversal is Robinhood, a company that has become synonymous with consumer trading and investment activity, and the stock meme craze in particular. The fact that Robinhood has added cryptocurrency trading in recent years, adding to its torrid rise, only makes its recent results all the more pertinent to the ways public and private markets have changed in late 2021 and even now into 2022.

Robinhood shares dropped sharply yesterday and fell further after the company released its fourth quarter 2021 results. As of this morning, Robinhood stock was worth about $10.85 a share, 71.5% off its IPO price and 87.2% off its all-time highs. What happened? Let’s find out.

What Makes Robinhood Valuable

The simplest way to look at Robinhood’s business is to multiply active users by average revenue per user. Users — monthly active users, or MAUs — help the company generate payment for order flow and other revenue. Average revenue per user – or ARPU, if you like really horrible acronyms – is just that, allowing us to consider the company’s overall health as BAD*ARPU = results.

More of anyone is good, less of anyone is bad. More of both in any quarter is great, less of both in any quarter is likely to be a disaster. I understood? OK, let’s talk numbers.

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