Robinhood Shareholder Alert
Securities Litigation Partner James (Josh) Wilson Encourages Investors Who Suffered Losses Exceeding $100,000 In Robinhood To Contact Him Directly To Discuss Their Options
NEW YORK - ( NewMediaWire ) - December 24, 2021 - Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Robinhood Markets, Inc. (“Robinhood” or the “Company”) (NASDAQ: HOOD) and reminds investors of the February 15, 2022 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If you suffered losses exceeding $100,000 investing in Robinhood stock or options pursuant and/or traceable to the Company’s July 2021 initial public offering and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310). You may also click here for additional information: www.faruqilaw.com/HOOD.
There is no cost or obligation to you.
According to the Complaint, the Company made false and misleading statements to the market. Robinhood suffered from major issues with revenue growth at the time of the IPO, with its touted transaction-based revenues from cryptocurrency trading only providing a temporary boost to otherwise flat growth. The Company’s supposed “significant investments” in reliability and infrastructure growth were subpar, creating the opportunity for service disruptions and cybersecurity failures. Based on these facts, the Company’s public statements were false and materially misleading throughout the IPO period. When the market learned the truth about Robinhood, investors suffered damages.
On October 26, 2021, after the markets closed, Robinhood reported its third quarter 2021 financial results, revealing that its total net revenue for the period between July 1, 2021 through September 30, 2021 — the same period during which the Company conducted its IPO — came in at $365 million, badly missing analyst estimates by nearly $73 million, and declines in its monthly active users (“MAUs”), funded accounts, assets under custody (“AUC”), and average revenue per user (“ARPU”). Robinhood also disclosed that third-quarter transaction-based revenue from cryptocurrency trading, which in the lead up to the IPO had been the bulk of the Company’s revenues, was a measly $51 million, staggeringly below the $233 million Robinhood earned from crypto trading in the second quarter. The proportion of Robinhood’s cryptocurrency transaction-based revenue generated by Dogecoin alone fell 40% in Q3, with Robinhood only generating $20.4 million in Q3 compared to ~$144.5 million in Q2. At the same time, Robinhood’s net losses skyrocketed from $11 million to $1.32 billion due to a remarkable $1.24 billion stock based compensation expense that was tied to the stock’s post-IPO performance, and its initial rally – which boosted its shares to an all-time high of $85 a share on August 4, 2021 and triggered a massive payout to Defendants Tenev and Bhatt. To make matters worse, Robinhood also guided for “less than $1.8 billion” in revenue for the full year, implying a maximum 85% growth, which fell well short of analyst expectations of 111%.
Analysts immediately took note with those at J.P. Morgan, for example, downgrading their price target and characterizing the Company’s trading revenue as a “disappoint[ment],” noting in particular how “equity trading was particularly weak, down both sequentially and YoY despite a near doubling of accounts and MTUs” and how “[c]rypto trading revenue fell 78%, down more than the crypto industry average of ~40% and the decline of Dogecoin trading of ~75%[,]” before concluding “we believe Robinhood has been overearning and guidance will weaken for ’22.” J.P. Morgan also questioned why management “did not disclose trading volumes,” finding it “peculiar for a company generating ~75% of revenue on volumes,” but, nonetheless, suspecting “revenue per trade had been elevated [indicating] a weaker business outlook.”
On this news, Robinhood’s stock declined nearly 10.5%, falling from $39.57 per share on October 26, 2021 to close at $35.44 per share on October 27, 2021.
Then, on November 8, 2021, after the markets closed, Robinhood disclosed that it had suffered a “data security incident” on November 3, 2021, admitting that an “unauthorized third party” had obtained email addresses for approximately five million users and the full names of a different group of about two million users, indicating that the attack potentially affected nearly 40% of Robinhood’s MAUs. What is more, Robinhood said the additional personal information of 310 other users, including their names, dates of birth, and zip codes, were exposed, and within that group, that 10 users suffered even “more extensive” breaches.
On this news, Robinhood’s stock declined further, falling over 3% on November 9, 2021 to close at $36.70 per share, before then falling another 6% to close at $34.49 the very next day.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Robinhood’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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