It’s a renaissance for non-institutional market participation, and Robinhood wants to capitalize on that environment.
The commission-free trading app told investors during its fourth quarter 2022 earnings call Wednesday (Feb. 8) that by targeting customers affected by macroeconomic headwinds with strategic value-add solutions, as well as through broader platform evolutions, it has been able to improve retail audience engagements.
At-home trading levels for 2023 have reportedly already passed the peak seen during the heights of the GameStop-era pandemic- and stimulus-check-inspired fervor.
Still, the company shed 800,000 monthly active users during the quarter.
Its transaction-based revenues were down 11% sequentially, as a result of dampened equity and crypto trading.
“We are focused on driving net deposits as well as account growth,” Robinhood Co-Founder and Chief Executive Officer Vlad Tenev said.
Robinhood’s fourth quarter 2022 monthly active user count of 11.4 million is the platform’s lowest going back to 2020.
“The vast majority of customers continue to engage over time, if not on a daily basis,” Tenev told investors during the fourth quarter earnings call, addressing the outflow. He added that the company was working harder to deliver innovative functionality to acquire and retain more retail investors and at-home traders.
In addition to its trading platform, Robinhood earlier this year (Jan. 17) announced the formation of Sherwood Media, a new subsidiary for news and information on markets, economics, business, technology and the culture of money.
Key retail-driven offerings launched during the company’s fourth quarter included retirement services, increased yields up to 4%, and better customer support, including 24/7 live chat.
“We are [also] working to take first steps on the path to an advisory product, which can bring more users to the platform in the future … as well as going beyond tools and experiences for our advanced customers,” Tenev said.
At-home traders remain enamored with options, and Tenev demurred during the earnings call’s Q&A session when asked directly about the trading platform’s plans in that space — saying only that Robinhood had a lot of exciting things planned for 2023, including an aggressive goal to offer brokerage services in the UK.
Tenev also briefly addressed a set of recent proposals from the Securities and Exchange Commission (SEC) that would overhaul the handling of small investors’ trades, which represents the bread and butter of Robinhood’s business even as it has begun to rely more on other revenue streams such as collecting interest on balances.
“We’ve got a diversified business and we’re continuing to grow,” Tenev said in response to a question around the impact of the SEC proposals. “We think investors have it great right now, the tools and functionalities have never been better. … Ultimately we think they [the SEC regulations] are unlikely to pass in their current form.
“We will work with the SEC and continue to advocate for what we think is right for our customers,” added the Robinhood CEO.
Per a Wall Street Journal report, Robinhood believes the SEC’s plans would “turn back the clock to the days before zero-commission trading, when investors had to pay fees for buying and selling stocks.”
“Today’s markets are not as fair and competitive as possible for individual investors,” SEC Chair Gary Gensler wrote.
Robinhood also announced plans to buy the 55 million remaining Robinhood shares that Emergent Fidelity Technologies bought last May.
As reported by PYMNTS, the Sam Bankman-Fried-owned business filed for bankruptcy last week.
PYMNTS wrote that federal prosecutors took possession of the Robinhood shares in January as part of a larger seizure of assets in the case of Bankman-Fried.
Bankman-Fried, who has maintained his innocence, has said he needs the Robinhood shares to help fund his defense.
“Since there is limited precedent for this type of situation, we cannot predict when, or if, the share purchase will take place,” Tenev said.