The pandemic-driven heyday is over for no-fee online stock trading startup Robinhood, whose market value is eroding as quickly as the cash on its balance sheet and its fan club of users dwindle.
Share price dropped to a record low of $6.87 on Wednesday (June 15), down over 80%. Robinhood showed $6.19 billion of cash and cash equivalents at the end of the first quarter on May 31. Since its initial public offering (IPO) last July, Robinhood’s losses topped $3 billion.
Following May’s gloomy metrics, some analysts dropped their price targets on Robinhood’s stock this week, aligning with the overall market’s decline and the cryptocurrency market’s pandemonium, Bloomberg reported.
Atlantic Equities analyst John Heagerty lowered his price target to $5 a share a day after JPMorgan Chase analyst Ken Worthington cut his to $7, per Bloomberg.
Monthly active users dropped 39% from last year and the company is trading at about 85% of its book value.
“A lot of guys who opened up accounts, acting on suggestions from Reddit, have gone away,” Piper Sandler & Co. analyst Rich Repetto, who has a neutral rating on the stock, told Bloomberg.
A spokesman for Robinhood declined to comment, according to the report.
“With customers returning to pre-pandemic behavioral trends and a potential recession ahead, user engagement seems likely to decline further,” Heagerty wrote in a note to clients, Bloomberg reported. “Plummeting crypto valuations will have a direct impact on both volumes and order value.”
Once billionaires, Robinhood co-founders Chief Executive Officer Vlad Tenev and Chief Creative Officer Baiju Bhatt have dropped off the list. The upheaval also cut the fortune of crypto billionaire Sam Bankman-Fried, who holds 7.6% of Robinhood’s outstanding shares. His stake dropped 40% to roughly $400 million.