Robinhood (NASDAQ:HOOD) reported earnings this week and they were dismal.
Besides negative numbers on both the top and bottom lines, Robinhood reported that Monthly Active Users (MAUs) dropped by a whopping 10% going from 15.9 million in March 2022 from 17.7 million in March 2021. A horrible number. On a sequential basis, MAU decreased by 8% compared with 17.3 million for December 2021.
Robinhood explained away the decline because users have lower balances and some are engaging less in the current market environment.
Prior to the disappointing report, Robinhood announced it was letting about 9% of its current employees go, admitting they had grown too quickly.
Today, shares hit a new all-time low of $9/share, a crushing decline from its all-time high of $85 and well off its IPO price that was pegged at $38/share. But shares then delivered a slight reversal, at least temporarily, going into the green.
So why the bounce? Is it a head fake? A dead count bounce?
Some of the chattering classes see Robinhood as an acquisition target. With a market cap of around $8.6 billion, any number of financial services firms could take the social trading platform out, gaining access to their 22.8 million accounts. There is blood in the water and competitors or strategic investors may sense an opportunity.
While some firms may be eyeballing Robinhood, do not expect anything soon. Shares in Robinhood can move even lower if recent trends continue. Robinhood has committed to sharing monthly metrics disclosures. These need to improve. If they do not, $9 a share may be a temporary stop with more value destruction on the way.