On September 12, Robinhood Markets, Inc. (NASDAQ: HOOD) reported several key operating statistics comparing the month of August to prior trading months. While one important data point, assets under custody, was somewhat disappointing, the totality of the release has to be considered hopeful.
Assets under custody (the total value of customer accounts) was US$71.0 billion as of August 31, 2022, down 5% from US$74.6 billion at the end of July. Not surprisingly, this decline approximately mirrors the overall drop in the value of stocks during the month. The S&P 500 Index lost 4.2% in August.
| August 2022 | July 2022 | June 2022 | May 2022 | April 2022 | |
| Cumulative Funded Accounts (millions) | 22.9 | 22.9 | 22.9 | 22.8 | 22.8 |
| Monthly Active Users (millions) | 13.3 | 13.2 | 14.0 | 14.6 | 15.7 |
| Assets Under Custody (US$ billions) | $71.0 | $74.6 | $64.2 | $73.9 | $78.5 |
| Trading Volumes: | |||||
| Equity (US$ billions) | $66.0 | $48.8 | $50.1 | $58.2 | $54.7 |
| Option Contracts (millions) | 89.9 | 67.0 | 68.3 | 71.9 | 70.4 |
| Cryptocurrencies (US$ billions) | $5.3 | $5.5 | $5.5 | $6.6 | $6.9 |
| Trading Days (Equity and Options) | 23 | 20 | 21 | 21 | 20 |
| Trading Volume Per Trading Day: | |||||
| Equity per Day (US$ billions) | $2.9 | $2.4 | $2.4 | $2.8 | $2.7 |
| Option Contracts per Day (millions) | 3.9 | 3.4 | 3.3 | 3.4 | 3.5 |
| Cryptocurrencies Per Day (US$ billions) | $0.2 | $0.3 | $0.3 | $0.3 | $0.3 |
More constructively, Robinhood’s average trading volume in equities reached US$2.9 billion per trading day in August, up 21% from July. Note that Robinhood’s equity trading volumes are measured in dollars, meaning that the overall decline in August stock prices, at the margin, reduced dollar volumes. Consequently, the underlying “unit” volume increase in August stock trading was even more pronounced than the raw figures imply.
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Similarly, the company’s average number of option contracts traded per day in August was 3.9 million, 15% more than 3.4 million in July. In addition, August marked the first month where Robinhood’s daily trading volume rose on a month-to-month basis since March.
Monthly active users rose slightly in August to 13.3 million from 13.2 million in July. The number of June monthly active users was 14.0 million.
Robinhood’s stock market capitalization is about US$9.0 billion, about US$5.8 billion of which is supported by its net cash position, making its enterprise value only around US$3.4 billion. Robinhood’s shares are down more than 85% from its all-time high achieved in early August 2021.
Robinhood’s adjusted EBITDA in 2Q 2022 was negative US$80 million, much improved from negative $143 million in 1Q 2022, and the company’s best quarterly performance on this measure since it posted positive US$90 million of adjusted EBITDA in 2Q 2021. In addition, the company’s ongoing expenses seem likely to fall even further in 3Q 2022 and 4Q 2022 after its recently announced 23% headcount reduction (equivalent to about 780 employees). Given all this, plus the improved August trading metrics described above, investors might consider covering short bets against the stock.
Robinhood Markets, Inc. last traded at US$10.24 on the NASDAQ.
Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
