"Nearly 14.2 million Robinhood users, or roughly 63% of the company’s customer base with funded accounts, traded digital assets in the second quarter." [paywall] https://www.wsj.com/articles/robinhood-revenue-surges-on-cryptocurrency-trades-11629319749 Robinhood Revenue Surges on Cryptocurrency Trades Trading app posted a $502 million loss in second quarter due to an emergency funding deal The brokerage app Robinhood has transformed retail trading. WSJ explains its rise amid a series of legal investigations and regulatory challenges as it looks forward to its IPO. Photo illustration: Jacob Reynolds/WSJ By Updated Aug. 18, 2021 6:39 pm ET Revenue at Robinhood Markets Inc. more than doubled in the second quarter thanks to a torrent of customers trading cryptocurrency, but the company posted a big loss due to an emergency funding deal earlier this year. The trading app recorded a loss of $502 million, or $2.16 per share, on revenue of $565 million in its first earnings report since its July initial public offering. In the second quarter of 2020, Robinhood generated a profit of $58 million on revenue of $244 million. Nearly 14.2 million Robinhood users, or roughly 63% of the company’s customer base with funded accounts, traded digital assets in the second quarter. Robinhood earned $233 million in fees from routing customers’ cryptocurrency trades to high-speed trading firms, with dogecoin accounting for nearly two-thirds of the volume. That is up from just $5 million a year earlier. That helped offset slowdowns in other parts of Robinhood’s business due in part to waning interest in meme stocks. For instance, fees Robinhood earned executing customers’ stock trades fell 27% to $52 million. Despite decreased stock-trading activity, interest that Robinhood received on margin loans nearly tripled to $31 million. Around 700,000 users held about $5.4 billion in margin-loan balances at the end of June.
They should announce a big push into DeFi, a new stablecoin, brokerage platforms for NFTs and digital land, robotaxis, virtual reality, and asteroid mining for good measure, and a $10 billion capital raise to fund these ventures - the stock would probably rise 10- to 100-fold. After all, the reigning theory these days is "optionality", i.e. that as long as a company's managers are bold enough and keep throwing shit to the wall they might find the next 100-bagger idea, which justifies paying any arbitrarily high price and tipping in unlimited amounts of capital. The bigger the better in fact, in a sort of perpetual motion machine, since throwing more shit increases your odds. I'm only half kidding - just look at TSLA.
Here is the biggest clue that there is in fact a lot of optionality on HOOD or TSLA for that matter: most people that trash it are extremely unwilling to short it, that probably includes you. That's a huge clue right there
There are plenty of stupendously overvalued companies with no 'optionality' angle that I don't short, either. There's no coherent bull thesis for AMC but it's traded similar to the other meme/cult high flyers, because that's what happens in a mania. The main difference between now and the past is the explicit and huge government/Fed put, removing (for now) any real fear of permanent losses. Hence it can go on for many more years, and I'd be a fool not to trade it from the long side where appropriate.
I thought we were talking about HOOD and TSLA? I dont know much about AMC but HOOD is probably the fastest growing brokerage in US history, if you dont think the management that did that has anything special about them, well, thats crazy. And TSLA, it can drop 80% and still all the critics will remain wrong as they started spouting their takes from much earlier. That's the problem with the whole bear takes that are written, the authors are awful at actually keep tracking of their predictions. Somehow it is all forgotten and they have a new take from much higher prices and they want credit if it comes down from there. All the bears from 2014 and 2015 would have laughed if people made projections like these Except, that is what Tesla actually did deliver And its funny to me that you mentioned that you participate on the long side, whether you profit based on low rates or whether its due to fundamentals, it can look awfully similar, for many years. Some folks have an obsession with price to earnings and profits (usually, because they read too much Warren Buffett, who has not beaten the market for 15-20 years) that they cant see that dominant companies can raise prices at any time and produce those much cherished profits but they choose not to because its a better strategy long-term Peter Thiel had an amazing reddit AMA a few years back where he addressed a lot of that His book Zero to One is also outstanding. So yes, there are bubbles, manias and overvaluations but finance and "value" people (What Thiel call "MBA types") have the wrong threshold on when to call things bubbles and say they are overvalued. A lot of this stuff is unknowable and all you can do is to take probabilistic bets in the direction of the asymmetry. If it doesnt work out, finance people will laugh and say 'dummy, it was a bubble all along' but when it does and the pay off is 100x they will quickly erase those bearish takes from their memory and move on into trashing the next thing