Hood Plunges on Weak Trading Activity

Robinhood Markets Inc. (HOOD:US) just reported its Q3 earnings and the market doesn’t like it. The stock crashed about 15% during trading and closed at $8.36. Quarterly sales stood at $467 million, falling short of Wall Street estimates. However, they were up on a YoY basis mainly due to higher interest rates. 

The company suffered from a slowdown in trading activity that saw its transaction-based revenues go down by 11% YoY. Trading revenues from cryptocurrencies were down 55% while revenue from equities trading dipped by 13%.

Richard Blumenthal Bails Out on Time

Richard Blumenthal, the Democrat Senator from Connecticut, has been slowly trimming down his holding in the stock since the IPO. He sold $65,000 to $150,000 worth of HOOD stock in June at $9.97. The stock currently trades at $8.36, which is 16% below his selling price.

Cathie Wood Continues to Buy As Hood Plans to Enter UK

Robinhood is about to enter the UK market. Cathie Wood of ARK Invest just purchased $9.54 million worth of stock in the company. She is confident that entry into Europe will have a positive impact on the company. But that’s easier said than done. The UK does not allow payment for order flow (PFOF), a rather controversial stream of revenue for the company. 

More than the controversy, the tough regulations in the UK are likely to hit the company’s revenues, which used to get as much as 80% of its revenues from PFOF at its peak. Payment for order flow is an integral part of Robinhood’s commission-free trading offers. How it navigates the UK market without it remains to be seen.