Robinhood Sees Operating Metrics Continue To Deteriorate

Last week, Robinhood Markets, Inc. (NASDAQ: HOOD) reported monthly operating data for August 2023 that represented a step back from more constructive results in June and July 2023.

Monthly active users (MAU) fell back to 10.6 million in August 2023 from 11.0 million in July 2023 and 10.8 million in June 2023. The August MAU figure matched the May 2023 reading which was the company’s lowest total since the summer of 2020, when Robinhood was still a private company. 

The high point was November 2021, when some 18.6 million active users traded on Robinhood’s online platform. Even in the ugly trading days of June 2022, Robinhood had 14.0 million MAUs. 


August 2023July 2023June 2023May 2023April 2023
Cumulative Funded Accounts (millions)
Monthly Active Users (millions)10.611.010.810.611.5
Assets Under Custody (US$ billions)$89.7$94.5$88.8$81.8$77.4
Trading Volumes:
     Equity (US$ billions)$59.8$69.2$66.9$49.4$38.9
     Option Contracts (millions)107.3106.1110.597.575.3
     Cryptocurrencies (US$ billions)$2.2$3.4$3.3$2.1$3.7
Trading Days (Equity and Options)2320212219
Trading Volume Per Trading Day:
     Equity per Day (US$ billions)$2.6$3.5$3.2$2.2$2.0
     Option Contracts per Day (millions)
     Cryptocurrencies Per Day (US$ billions)$0.1$0.2$0.2$0.1$0.2
Average Account Balance (US$)$3,866$4,073$3,828$3,541$3,351
     Sequential Growth-5.1%6.4%8.1%5.7%-1.3%

Similarly, Robinhood’s equity trading volume in August 2023 retreated to US$2.6 million per trading day, down from much more robust levels in the previous two months (US$3.5 million/day in July and US$3.2 million/day in June). Still, August’s level was better than the low US$2 million per day trading volume range seen on Robinhood’s platform in April and May of this year.

Robinhood’s options contract trading volume followed much the same pattern. August 2023 options contract trading volume was 4.7 million contracts per day, down from 5.3 million in both June and July, but up from April/May 2023 activity levels.

The company’s cryptocurrency trading in August 2023 of US$2.2 billion was down about a third from the June and July figures of US$3.3 billion and US$3.4 billion, respectively.

Robinhood’s assets under custody and its users’ average account balances meanwhile have stabilized at higher levels over the last few months. Total client assets were nearly US$90 billion in August, and a typical Robinhood account had a balance of US$3,866 at the end of last month.

Despite August’s weaker operating metrics, Robinhood looks reasonably valued. Factoring in Robinhood’s enterprise value (EV) of about US$3.8 billion and its adjusted EBITDA over the twelve months of US$395 million, the company’s key EV-to-adjusted EBITDA valuation ratio is around 10x.

On the other hand, Robinhood faces significant uncertainties regarding its future revenue profile, namely whether it will be permitted to continue its practice of receiving payment from certain third parties for order flow. Given these two conflicting factors, investors may consider limiting exposure to Robinhood’s shares over the near term.

Robinhood Markets, Inc. last traded at US$9.70 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.

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