Robinhood quarterly revenue misses on muted trading activity
© Reuters. The logo for Robinhood Markets, Inc., is displayed on a screen during the company’s IPO at the Nasdaq Market site in Times Square in New York City, U.S., July 29, 2021. REUTERS/Brendan McDermid) Markets missed Wall Street estimates for third-quarter revenue on Tuesday, weighed by a slowdown in trading activity, sending shares of the online brokerage down nearly 7% in extended trading.
The boost has since faded as Americans grappling with a cost-of-living crisis, high interest rates and elevated levels of inflation put trading on the back foot. The muted trading activity took the shine off Robinhood nearly doubling the income it earns from charging customers interest on their loans against the backdrop of the U.S. Federal Reserve's rapid monetary policy tightening.Robinhood allows eligible customers to borrow money to purchase securities and charges an interest on the debt. The feature, known as"margin investing", has provided sanctuary to the retail investor-focused firm from taking a hit due to muted trading activity.
The company's net revenue rose 29% to $467 million in the three months ended Sept. 30, but missed Wall Street expectations of $478.4 million, according to LSEG data.
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