Down 60% From Its IPO Price, Is Robinhood Stock A Steal?

Down 60% From Its IPO Price, Is Robinhood Stock A Steal?

BRAZIL - 2019/07/22: In this photo illustration a Robinhood Markets logo seen displayed on a ... [+] smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)

SOPA Images/LightRocket via Getty Images

Robinhood Markets stock (NASDAQ: HOOD) has declined by almost 23% thus far in 2022, considerably underperforming the S&P 500 which remains up by about 6% over the same period. The stock now trades at almost 60% below its July 2021 IPO price. There are multiple trends impacting Robinhood. Firstly, with interest rate hikes and tighter monetary policy expected this year, the boom in so-called “meme” stocks and speculative cryptocurrencies is cooling off, hurting trading activity and user metrics. This was evident in Robinhood’s weaker than expected Q4 2021 results, as monthly active users dropped about 8% sequentially with annualized per user revenues dipping by almost 39%. Robinhood also expects revenue to decline by at least 35% over Q1 2022, to under $340 million, due to a tough comparison with Q1 2021, when the meme stock craze just began. Separately, investors have also been concerned about regulatory scrutiny surrounding Robinhood’s payment for order flow revenue model as transaction revenues accounted for about 73%