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Robinhood's First Earnings, Explained

Today is Thursday, August 19, 2021.

Robinhood's Guidance Spooks Investors

Shares of Robinhood (Nasdaq: Hood) slipped nearly 10% in after-hours trading Wednesday after the company, during its earnings release, issued a warning of seasonal headwinds and lower trading activity in the third quarter that could result in lower revenues.

A Mixed Bag: Revenue grew 131% for Robinhood in the second quarter to $565 million. The company also reported a net loss of $502 million, which was expected.

Good Cryptocurrency News: The share of the revenue from cryptocurrency jumped from 17% in the first quarter to 51% in the second quarter.

Bad Cryptocurrency News: 34% of the crypto revenue was attributed to Dogecoin. Robinhood said that if demand for Dogecoin dropped and was not replaced by another cryptocurrency, that could be bad for business.

Final Thoughts: No matter the results, Robinhood remains popular for the meme stock crowd.


Notable Earnings Today: Macy’s (NYSE: M), Kohl’s Corporation (NYSE: KSS), Applied Materials (Nasdaq: AMAT), Ross Stores (Nasdaq: ROST), Estee Lauder Companies (NYSE: EL), BJs Wholesale Club Holdings (NYSE: BJ), Petco (Nasdaq: WOOF).

Notable IPOs Today: Macondray Capital Acquisition Corp. I Class A Ordinary Shares (Nasdaq: DRAY).

Notable Equity Crowdfunding Campaigns Ending Today: O2 Treehouse (StartEngine), 701 Eateries (MainVest).

Notable Economic Events Today: Philadelphia Fed manufacturing index (8:30 a.m.), Jobless Claims (8:30 a.m.).

Facebook Eyes Crypto Payments Space

Novi, a digital wallet from Facebook (Nasdaq: FB) that is designed for assisting with digital payments and storing cryptocurrency, is ready to come to market, according to a medium post on Wednesday from the tech giant’s financial executive David A. Marcus.

FinePrint: Marcus writes that Facebook deserves “a fair shot,” to join the digital payments space, pointing out that the company has enabled over $100 million in digital payments during the last four quarters.

History: After Facebook’s first entrance in crypto with the currency Libra failed due to massive pushback, the company switched focus to a watered-down plan featuring stablecoins and blockchain payment system Diem. The digital coin is slated to launch later this year.

Stock Watch: Facebook stock slipped 0.84% on Wednesday. It was a mixed day for crypto prices as well.

Final Thoughts: For Facebook, there are some questions about how it expects to profit from crypto. But for the crypto world, Facebook’s entrance adds some much-needed legitimacy to the space.

Fintech Startups Disrupting Direct Indexing

Large financial institutions, including Vanguard and Morgan Stanley, have acquired fintech startups in the past year or so that offer direct indexing, which allows an investor to build a customizable portfolio that mimics an index.

What are the next fintech startups that are disrupting the direct indexing space?

C8 Technologies: This U.K.-based company, which started in 2017, offers both active and passive index investing. This includes direct indexing of the actual underlying assets.

Magnifi: A subsidiary of fintech platform TIFIN, Magnifi recently introduced direct indexing products based on indexes created by Morningstar.

Veriti Management: A fintech company that specializes in direct indexing, Veriti Management said last week that it has over $900 million in assets under management since it formed three years ago.

Final Thoughts: As direct indexing becomes more popular, there will be new disruptors in the space. This will create more options for investors.

Trends to Watch

Going Lower: Cisco Stock Dips As Fiscal 2022 Revenue Guidance Shows A Slowdown (Investor’s Business Daily)

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