Daily Brief: Robinhood's Only Been On The Stock Market For A Few Months, And It's Already Old And Tired

Daily Brief: Robinhood's Only Been On The Stock Market For A Few Months, And It's Already Old And Tired

about 2 years ago3 mins

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Robinhood reported worse-than-expected results late last week, so the trading app might be hoping a new retirement product will help wind the clock back to its glory days.

What does this mean?

Robinhood boasted nearly 23 million accounts at the end of last quarter, but that doesn’t mean much if they're not being used. In fact, the platform’s monthly active users fell by 1.6 million last quarter from the quarter before – a far cry from the nearly 1 million rise analysts were expecting. Even revenue from all-important crypto trades – a big driver of growth in the first half of last year – was down 6%, slipping for the second-straight quarter. Overall, then, the company posted a bigger-than-expected loss of $423 million. Robinhood isn’t buzzing about this quarter either: it’s expecting a worse-than-expected 35% drop in revenue compared to the same time in 2021.

Robinhood loss

Why should I care?

For markets: Retire with Robinhood.

Investors sent Robinhood’s shares down 15% after the news, meaning they’re now down nearly 90% from their August high. So the company’s trying whatever it can to turn things around: it’s been working on retirement accounts and other new features to bring in long-term investors and savers. And since it seems to think more crypto could draw the high-frequency crowds in, Robinhood also announced plans to add more coins, open its platform up to international users, and roll out its own crypto wallets to everyone.

Robinhood stock

The bigger picture: Derivative is good.

The drop-off in crypto trades might have something to do with the ever-stiffening competition from the likes of FTX US, which announced last week that it’s raised $400 million in investment. That puts its value at $8 billion, and makes it one of the world’s most valuable private crypto firms. FTX plans to use that cash to push into derivatives, which make up over half of all crypto trades. No wonder rival Coinbase wants a piece of the action too: the crypto exchange agreed to buy derivatives exchange FairX earlier this month.

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Chevron’s Results Were Impressive, But They Still Let Down Demanding Investors

Chevron image

Chevron posted pretty exceptional quarterly results on Friday, even if the US oil giant still isn’t able to live up to investors’ exacting standards.

What does this mean?

Oil and natural gas prices have regained their mojo over the past year, as demand for the fuels rode the coattails of a recovering economy. In fact, the average price of a barrel of oil almost doubled last quarter from the same time the year before, while natural gas prices in the US more than tripled. That’s given Chevron its va va voom back too: the company reported a $5.1 billion profit last quarter – a sharp turnaround from the near $700 million loss it made the same time in 2020, and all the more surprising considering it produced 5% less oil and gas. Still, with analysts anticipating a profit of around $6 billion from the company, investors – who sent Chevron’s stock to an all-time high last week – felt short-changed: they initially sent Chevron’s shares down 3%.

Chevron record high

Why should I care?

For markets: Coffee’s for closers.

Every oil company is at the mercy of high expectations right now, with an index tracking some of the biggest producers having outperformed the US stock market by 24% this year. But since Chevron – the first of the Big Oils to report this earnings season – missed expectations, it doesn’t bode well for its rivals going forward. So steel yourself: we could be in for one disappointing update after another over the next few weeks.

Zooming out: America’s doublethink.

Let’s put this into perspective: US demand for energy is going strong, regardless of whether investors are happy. And there’s no better evidence of that than the wider US economy, with data out late last week showing that it grew by a faster-than-expected 1.7% last quarter versus the one before. That brings last year’s growth to 5.7% – the biggest yearly uptick since 1984.

US GDP
Source: The New York Times
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