One thing I love about fintech is the promise to unlock more tools for more people. In a broad sense, the current fintech era has done just that: people around the world now have access to financial services that were previously either completely unobtainable, or at the very least unaffordable.
Neobanks, fintech APIs, new savings programs, infinite cards for different payment methods, stablecoins for cross-border payments, cheaper fiat transfers and of course free trading have improved the way the average person can use, store and interact with money. It pretty much rules.
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The technology has turned out pretty damn neat, but there are some issues on the business model side. It turns out that not charging what was once a paid service is a great way to acquire customers, but it can also be a tricky way to make money at times. This is a lesson Robinhood is learning – and as a publicly traded company is sharing with the rest of the world.
This week Robinhood reported Q1 results that were well below street expectations. CNBC notes that the company’s loss per share of $0.45 was $0.09 worse than analysts’ expectations, and the company’s revenue of $299 million was about $57 million lower. Shares of Robinhood are trading sharply lower this morning.
If we parse Robinhood’s earnings presentation this morning, it’s clear that the stock trading boom that sparked the hypergrowth is over. And of all the company’s products, the most enduring remains the most controversial — yes, Robinhood’s options trading earnings once again represent the bulk of its transaction revenue, after depreciation in stock transactions and crypto trading activity.