Robinhood Markets (Nasdaq: HOOD) has witnessed a slowdown in demand in April, with a declining active users and trading volume, the broker revealed in its training metrics published on Wednesday.
Is Robinhood Facing a Declining Demand?
The brokerage ended the month with 11.5 million monthly active users, down by about 300,000 from the previous month. The number of these users went down by 26 percent from the same month of the previous year. However, the number of net cumulative funded accounts went up by about 30,000 to reach 23.1 million.
Trading volume on the platform also took a significant hit in April. Trading with equities instruments $38.9 billion, 32 percent down from March and 29 percent from April 2022. Options trading, which brings the highest chunk of Robinhood’s trading volume, also went down to 75.3 million contracts, a monthly decline of 25 percent but increased by 7 percent year-over-year.
Cryptocurrency trading also faced demand dullness as trading volumes declined to $3.7 billion from the previous month’s $3.9 billion. On a yearly basis, crypto trading volume on the platform decreased by 47 percent.
The daily average revenue of trades (DARTs) also went down across instruments, monthly and yearly. DARTs for equities came in at 1.4 million, 11 percent lower from March, while options and cryptos, at 0.5 million and 0.2 million, declined by 14 percent and 2 percent, respectively.
The trading platform held $77.4 billion in assets under custody (AUC) at the end of this month, down 1 percent from March. The net deposits in April were at $1.4 billion.
A Popular Platform
Robinhood is a popular retail trading platform that grew with a zero-commission model and an intuitive interface. The popularity of the platform even forced other established players across the globe to introduce zero-fee trading.
However, the retail trading platform was also at the center of controversies, mostly due to its opaque business model. Over the years, the platform paid heavy fines for multiple violations: $30 million in 2023 to the NYDFS, $70 million in 2021 to FINRA, and $65 million in 2020 to the SEC. Alabama state regulators recently fined the platform $10.2 million for a system outage in 2020.
While the revenue of the trading platform continues to grow, its losses are mounting. It generated $441 million in revenue in the first quarter of 2023, while losses at $511 million deepened by over 200 percent.
This article was written by Arnab Shome at www.financemagnates.com.
