In the aftermath of Robinhood’s third-quarter earnings release, the investing world watched the retail platform’s stock tumble approximately 14%—a reaction to disappointing trading volumes and a drop in monthly active users. Yet, amidst this decline, Cathie Wood’s Ark Invest saw a glimmer of opportunity.
Despite Robinhood’s mixed financials, the company did surpass some expectations, reporting a net loss that tightened to $85 million, or nine cents per share, from last year’s 20 cents per share. Moreover, its revenue climbed by 29% year-over-year, reaching $467 million—although it fell short of the $480 million anticipated by analysts.
A standout detail in Robinhood’s report was the striking growth in net interest revenue, nearly doubling from last year, contrasted with an 11% decrease in transaction-based revenues. While monthly active users dipped to 10.3 million, the silver lining appeared in the form of a 27% increase in average revenue per user.
Robinhood’s CEO Vlad Tenev remained optimistic, looking forward to global expansion and a continued quest to redefine the financial industry landscape. With plans to “soon launch” in the U.K. and crypto trading in the European Union on the horizon, Robinhood’s narrative is one of forward motion.
For Cathie Wood and Ark Invest, Robinhood’s stock slide was an invitation to invest. On November 8th, Ark scooped up 1,141,046 shares of the beleaguered company, valued just shy of $10 million. The lion’s share of this acquisition went to Ark’s flagship Innovation ETF, with the remaining distributed among the Next Generation Internet and Fintech ETFs.
This latest acquisition swells Ark Innovation’s Robinhood stake to over 21 million shares, constituting 2.54% of the fund—a fund already studded with heavyweights like Coinbase, Roku, and Tesla.
As Robinhood shares nudged upwards by 2% in pre-market trading, Wood’s move signals a confident bet on the platform’s future. For investors tracking Ark’s maneuvers, this could be a sign of Wood’s faith in Robinhood’s resilience and potential, despite the headwinds.
In a landscape where investor sentiment can be fickle, Wood’s strategy showcases a blend of analytical rigor and bold decision-making. It’s a reminder that sometimes, when the market zigs, it might just be the right time to zag.