Robinhood (HOOD) Stock Dips 8% on Worse Than Expected Q3 Results as MAUs Drop, Equities Dip 27%, and Crypto Rises 860%

Robinhood (NASDAQ: HOOD) stock fell over 8% after the company reported its Q3 results, with both EPS of ($2.06) and revenue of $365 million (up 35% year-over-year) missing the Street estimates of ($1.36) and $431.27 million, respectively.

Revenues from transactions, options, and cryptocurrencies grew 32%, 29%, 860% year-over-year, respectively, while equities decreased 27%. Cryptocurrencies revenue totaled $51 million in the quarter, eclipsing equities revenue of $50 million. Option revenue was $164 million.

Monthly Active Users (MAU) increased 76% to 18.9 million, which was below the second quarter's 21.3 million MAUs.

Assets Under Custody (AUC) increased 115% to $95 billion.

According to Vlad Tenev, the CEO and Co-Founder of the company, Q3 was about developing more products and services, including crypto wallets, and now more than one million people have joined the company’s crypto wallets waitlist.

The company provided its Q4 outlook, expecting that many of the factors that impacted Q3, such as seasonal headwinds and lower retail trading activity, may persist. The company expects Q4 revenue no greater than $325 million and full-year revenue of less than $1.8 billion, in case no changes to the market environment or exogenous events take place. This compares to the consensus of $497.48 million and $2.02 billion, respectively.

Commenting on the results, Mizuho analyst Dan Dolev called them "disappointing."

"With top-line results significantly below expectations (ours as well as consensus), lower MAUs, declining ARPU, very negative adjusted EBITDA...and disappointing 4Q guidance including no uptick in new funded accounts, we believe 3Q may be poorly received and we expect a negative stock reaction," he said.

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