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Robinhood Posts Larger-Than-Expected Loss for Second Quarter

Retail trading platform also offered cautionary guidance for this quarter citing seasonal headwinds and lower trading activity.
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Robinhood  (HOOD) - Get Robinhood Markets, Inc. Class A Report  reported a net loss that greatly exceeded expectations for the second quarter and offered a cautionary third-quarter forecast citing lower trading activity.

Shares fell sharply in the after-hours session following the brokerage app’s first results as a public company. The stock recently stood at $47.00 in after-hours trading, down 5.62%.

Robinhood, which went public in July, registered a net loss of $502 million, or $2.16 per share, in the second quarter, swinging from profit of $58 million, or 9 cents, in the same period last year. The FactSet analyst consensus called for a loss of 15 cents in the latest quarter

The company posted revenue of $565 million, more than doubling last year’s total of $244 million. The latest figure beat the analyst consensus of $521.8 million.

Robinhood garners about 50% of its income from selling its securities-trading flow.

“Our business is affected by many factors, including seasonality, general market conditions and retail trading behavior as well as significant, unanticipated market events,” Robinhood said in a statement.

“Many of these factors worked in our favor during the three months ended June 30, 2021, resulting in a very strong quarter with record revenues.

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“For the three months ending September 30, 2021, we expect seasonal headwinds and lower trading activity across the industry to result in lower revenues and considerably fewer new funded accounts than in the prior quarter.”

Robinhood received a buy rating $63.35 fair value estimate from Redburn Partners Tuesday.

Analyst Charles Bendit said Robinhood "has rapidly become a symbol of retail investing and finance in America."

Further, "Robinhood has had a profound impact on the construct of the brokerage market in the US," he said in a research report.

"It continues to enlarge its defined market and is geared into the increasing wealth of its users, a generation whose share of US wealth is projected to triple by 2030."

TheStreet.com offered a history of the firm earlier this month. Robinhood was founded in April 2013 by Vladimir Tenev and Baiju Bhatt, who had previously built high-frequency trading platforms for financial institutions.

The company's name comes from its mission to "provide everyone with access to financial markets, not just the wealthy."