Popular investment platform Robinhood is planning to offer its crypto trading services in the European market, choosing the UK as its first stop: the decision came in parallel with the company’s quarterly earnings news.
In particular, the data showed that cryptocurrency revenues were down 55 per cent on the same period last year, so it appears that Robinhood is looking for new opportunities in the EU market.
Nasdaq-listed HOOD shares were down around 8 per cent in pre-market trading after third-quarter revenue fell short of investor expectations.
At the same time, however, 2023 has been a positive year overall for the Californian company and for HOOD, which is up 20% since January.
See all the details below.
Latest crypto news: Robinhood and its European expansion programme
The latest news concerns popular trading platform Robinhood and its decision to expand its crypto-related services into Europe, after the company reported major revenue shortfalls in its November quarterly reports.
The broker, which currently only operates in the US, plans to land in the UK in a few weeks with its brokerage operations in the cryptocurrency market.
During its earnings call on Tuesday, Robinhood said:
“With an experienced team in place, we will soon launch brokerage operations in the UK. As a further step in our global expansion, we also plan to launch cryptocurrency trading in the EU following our UK launch.”
The news was somewhat predictable, as the Californian company has been busily recruiting in the UK this summer, despite not yet offering trading services in Europe.
However, Robinhood’s move comes at a very specific and planned time: first and foremost, the decision to open up to new horizons is motivated by the loss of $28 million in profits in the third quarter of this year (crypto market alone) compared to the same figures last year.
This loss is mainly due to the fact that in June the platform had to stop supporting several cryptos such as Cardano (ADA), Polygon (MATIC) and Solana (SOL) as a result of the SEC’s lawsuits against exchanges Binance and Coinbase. With a new European audience ready to trade crypto on the popular retail broker, Robinhood is likely to fill the void.
It should also be noted that new rules on promotions came into force in the UK on 8 October, requiring crypto firms to provide clear risk labels and implement system changes. As a fully compliant company, Robinhood will not be afraid to fill this regulatory gap and take advantage of the chaos in the country among unauthorised platforms.
Vlad Tevev, CEO and co-founder of Robinhood, said:
“As we look to the future, we remain focused on delivering industry-leading products that meet the financial needs of many more customers, gaining market share, expanding internationally and continuing to change the industry for the better.”
HOOD bleeds on Nasdaq after third quarter results
Robinhood Markets Inc saw its shares fall 8% in pre-market trading on the Nasdaq following the release of the company’s quarterly results yesterday, which were disappointing compared to analysts’ estimates.
The company, which became popular in the US in 2021 due to the investment frenzy created by the “Wall Street Bets” group and the success of some crypto offerings on the platform, such as Dogecoin and Solana, posted significant losses last quarter.
Robinhood ended Q3 with revenues of $467 million compared to $361 million a year ago, and a net loss of $85 million compared to $175 million a year ago.
Experts were expecting revenues of $478.9, which did not materialise despite a 29% increase over the same period last year.
Compared to the previous quarter (Q2 2008), the revenue shortfall was 4 percentage points.
Transaction revenue fell by 11%, largely due to the lower trading volume observed in the crypto market, which was 55% lower than in Q3 2023.
The number of crypto assets held on behalf of clients decreased by around 11% quarter-on-quarter, from $11.5 billion to $10.2 billion, but increased by 9% year-on-year from $9.4 billion.
Given the disappointing data released late last night, investors stormed HOOD in the Nasdaq pre-market, pushing it down to the short end.
Indeed, it is currently down 8.30% in the opening auction on the US stock exchanges, with a price per share of around $9.
It is worth noting, however, that the stock itself is up +20% since the beginning of the year, and that before the latest quarterly reports, Meme stock had managed a small rally of 2%. In September, the Californian company went to great lengths to support its share price, even going so far as to reach an agreement with the US government to buy back the shares held by Sam Bankman-Fried’s Emergent Fidelity Technologies, which was due to be liquidated shortly.
Looking ahead to the final quarter of the year, Robinhood expects many of the factors that impacted its third quarter results, “such as seasonal headwinds and lower retail trading activity“, to continue.
The company therefore predicts that if the macro scenario remains unchanged, the next quarter should also end with revenues of no more than $325 million, for a total of less than $1.8 billion in 2023.