Why is Robinhood being slammed today?

The trading and investment boom of 2020-2021 boosted revenue growth, fundraising, and narrative strength for a lot of organisations. Some of the most well-known companies even went public as a result of a worldwide trend that helped them shine. The lustre is wearing off, and the value of some fintech companies is plummeting.

Robinhood, a business that became associated with consumer trading and investment activity in general, and the meme stock craze in particular, is the finest illustration of this reversal. Robinhood’s latest findings are all the more relevant to how public and private markets have altered in late 2021 and so far in 2022, thanks to the addition of crypto trading in recent years.

The stock of Robinhood plunged dramatically yesterday, and it sank, even more, when the business released its Q4 2021 numbers. Robinhood stock was trading at roughly $10.85 per share this morning, down 71.5 percent from its IPO price and 87.2 percent from its all-time highs. What went wrong? Let’s have a look.

Why is Robinhood so special?

To understand the business of Robinhood, just multiply active users by average revenue per user. Monthly active users, or MAUs, assist the firm in generating revenue via order flow and other sources. Average revenue per user (ARPU) is precisely that, enabling us to measure the company’s overall health as MAU*ARPU = outcomes if you’re like genuinely bad acronyms.

Having more of either is good, having less of either is bad. Less of both in any quarter is likely to be bad. Is that clear? Let’s get down to business.