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May 1, 2022 04:34 pm

Robinhood Loses Over 1 Million Active Users. Is the Memestock Mania Over?

A Bloomberg opinion columnist calls the RobinHood stock-trading app "a symbol of the 'memestock' boom that galvanized a generation of bored locked-down day traders. "But judging by the company's latest figures, the mania is over."In the first quarter, Robinhood's monthly active users fell 10% year-on-year to 15.9 million, the lowest since the end of 2020. It's a loose metric, to be sure, covering debit-card swipes and webpage log-ins. Net funded accounts have held steady, but activity is flatlining: Transaction revenues fell by almost half, and average quarterly revenue per user slumped 61% to $53. In a post-lockdown era of rising inflation, consumers have less money and fewer hours to spare. Eyeballs and finger-swipes are not guaranteed. This will put Robinhood's premium "tech" valuation — around seven times annual revenue, a higher multiple than Meta Platforms Inc.'s — under extra pressure. Shares of the financial-services company have already fallen 71% in six months, a drop that began well before Ukraine. With fewer reasons to get excited about risky, hyped-up trades such as bitcoin (down 40% since October), the feedback loop of fear is spreading. Trading platform Coinbase Global Inc., which like Robinhood went public last year amid a retail-driven frenzy, is down 62%. The average Robinhood user is 31 years old with an account balance of $240. It's a band of merry men (women are a minority on the platform) who dabble. While the company's business model differs from that of social-media and streaming apps, the reversal of fortunes looks a lot like the post-Covid "attention recession" that's also battering the likes of Netflix and Spotify Technology. "The lost merry memestock men already appear disillusioned," the columnist argues. "What happens next, if speculative bets keep deflating, may swear them off trading for good." But he also sees Robinhood is "talking up its appeal to paid 'Gold' customers and is launching a more diversified, bank-like suite of products. With its recent announcement of a new debit card, Robinhood no doubt aspires to become a super-app like unlisted fintech Revolut, valued at around $33 billion, according to CBInsights."

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