What’s Going On Here?Robinhood’s quarterly earnings came in well below expectations earlier this week, as the jack of all trading apps proves it isn’t quite the expert it made itself out to be. What Does This Mean?Business was booming for Robinhood earlier this year, not least as retail investors rushed to get their hands on viral cryptocurrencies like dogecoin. But the company did warn that trading activity might drop off once lockdowns loosened up, and it wasn’t wrong: revenue from all-important crypto transactions fell 78% last quarter compared to the one before. And Robinhood isn’t expecting much from Christmas either: the company said it’ll see more of the same as we head into a (hopefully) coronavirus-lite festive season. Why Should I Care?For markets: This decline is starting to snowball.
Investors sent Robinhood’s stock down 10% on the back of the update, which means it’s now below the price it was trading at when the company first hit the stock market (tweet this). That revelation alone could be enough to turn investors off even more – especially those who invested before the IPO, who might want to lock in their gains in case the price falls any further. That sudden rush of selling, then, would only accelerate Robinhood’s downward spiral.
Zooming out: Everyone wants to Rent the Runway.
Investors seem more optimistic about clothing rental company Rent the Runway, which made its stock market debut on Wednesday. The company’s been benefiting this year as newly liberated fashionistas paint the town red again, and it’s seen the number of subscribers – who make up 80% of its overall revenue – more than double since February. It’s no sure thing, mind you: the clothes it buys constantly need replacing, which could impact its bottom line going forward. No such worries for investors on Wednesday: they initially pushed Rent The Runway’s shares up 10%. | 