• Robinhood Markets’ (HOOD) stock has collapsed, falling 74% since last autumn.
• The company is losing users on its trading app and racking up big losses.
• While Robinhood has launched several initiatives to improve its situation, HOOD stock continues to fall.

Down 74% in the past six months and 88% below its 52-week high of $85 a share, Robinhood Markets’ (NASDAQ:HOOD) stock has literally collapsed.

The online brokerage that promised to democratize stock trading for the masses has instead come to be associated with the meme stock rally and day trading that became popular during Covid-19 lockdowns when retail traders were gambling their stimulus checks in the market. Worse, many of the young acolytes who once championed Robinhood on social media sites, such as WallStreetBets, have now turned on the company, accusing it of deceptive practices and swindling them out of their money. This has led to souring sentiment and an exodus from the online trading platform that has resulted in HOOD stock tanking to its current price of below $10 a share.

Mounting Problems

Robinhood, which attracted Generation Z and millennial traders to its stock trading app by eliminating trading fees and forcing larger brokerages to do the same, is now struggling to grow and retain investors. In January of this year, Robinhood forecast first-quarter revenue of less than $340 million, which would be 35% lower than the same period last year. In the fourth and final quarter of 2021, Robinhood said that its number of monthly active users fell to 17.3 million from 18.9 million in the previous third quarter.

The forward guidance anticipating decelerating growth, along with the declining active user numbers, has not helped HOOD stock. Neither did the company’s fourth quarter 2021 financial results. Robinhood reported a massive net loss of $423 million for the fourth quarter of last year. While losses were reported across the company’s trading segments, analysts singled out the fact that revenue generated from cryptocurrency trading is steadily eroding at Robinhood. The brokerage reported cryptocurrency trading revenue of $233 million in the second quarter of last year. By the fourth quarter, crypto-based revenue had fallen to $48 million.

Swinging For The Fences

Of course, Robinhood is doing everything it can to stop the bleeding. Recently announced initiatives include the launch of a new debit card that allows users to invest their spare change. Robinhood is also offering customers the option to receive their paychecks up to two days earlier than they normally would through a direct deposit scheme. And, in a bid to eventually offer investors around-the-clock equities trading, Robinhood announced at the end of March that it will offer extended trading hours for its clients.

Robinhood’s stock-trading app is now available from 7:00 a.m. to 8:00 p.m. each business day. Previously, Robinhood offered trading 30 minutes before the opening of stock markets in New York and two hours after the end of trading. While Robinhood’s efforts are being applauded by some analysts, they have so far done nothing to reverse the downward trajectory of its share price. And it remains to be seen if the young investors who have soured on the online brokerage will find it in their hearts to forgive and return to the fold.

Don’t Buy HOOD Stock

While the narrative could eventually change, right now, Robinhood Markets looks destined to go down in history as part of the chaotic pandemic trading era that brought us meme stocks, non fungible tokens, special purpose acquisition companies, GameStop (NYSE:GME), Bitcoin (BTC-USD), diamond hands, Roaring Kitty, and the implosion of high value, unprofitable technology companies that Robinhood helped to champion. As just about everything associated with the pandemic continues to fizzle, so, too is Robinhood Markets’ share price. As such, investors should stay far away. HOOD stock is not a buy.