(Bloomberg) — Robinhood Markets Inc. tumbles after warning cryptocurrency-driven trading that fueled quarterly revenue may quickly fade.
The broker, which became a household name as cooped-up users bet on assets like cryptocurrency Dogecoin and meme stocks, drops 9% at 10:49 a.m. in New York. The company said seasonal issues and lower trading activity will impact third-quarter results.
“The narrative is starting to unwind,” said David Trainer, chief executive officer of research firm New Constructs. Robinhood’s guidance that trading activity and account growth may slow is a major warning to investors, he said, with expectations that the company’s performance will “be nowhere near what’s required to justify the stock price.”
The stock remains up more than 20% since its IPO, giving it a market value of $39 billion, and markedly outperforming the S&P 500 Index over the same period. Wild swings in the first weeks of trading amid rising interest from amateur investors drew Wall Street to brand the trading app a so-called meme stock.
The company is “at a pivotal point as equity trading volume fades and active app users and downloads slip from a strong 2021 start,” Bloomberg Intelligence analyst Julie Chariell wrote.
Menlo Park, California-based Robinhood, which went public last month, bought Say Technologies, a tool for shareholder voting and communication, earlier this month.
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