A Q4 Earnings Tale: Will Robinhood Investors Be Rewarded With Riches Or Continue To Suffer From Stock's Poor Performance?

Robinhood Markets Inc HOOD is set to report fourth-quarter results after the bell Wednesday. The stock is up nearly 30% year-to-date heading into the print. Here's a look at what to expect after the close. 

What To Know Ahead Of The Report: Robinhood is expected to report a fourth-quarter net loss of 14 cents per share on quarterly revenue of $397.1 million. The company has not turned in a profitable quarter since it went public on the Nasdaq in July 2021.

The stock debuted at $38 per share and surged in the days to follow, but despite some early volatility following the IPO, Robinhood shares have largely trended lower over the last two years.

In the company's most recent quarter, Robinhood, however, beat analyst estimates on both the top and bottom lines when it reported a third-quarter net loss of 20 cents per share on revenue of $361 million.

At that time, Robinhood noted that it was able to drive positive adjusted EBITDA by increasing revenues and reducing expenses. The Menlo Park, California-based company issued an upbeat outlook due to its cost reduction initiatives.

Robinhood guided for full-year operating expenses in a range of $2.34 billion to $2.4 billion, representing a decrease of 31% to 32% year-over-year. 

In the third quarter, monthly active users decreased by 1.8 million sequentially to 12.2 million. Following the print, Robinhood raised the yield on uninvested cash for Gold members, which could help to drive users back to the platform. 

Related Link: Robinhood Raises Interest Rates To 4.15% On $1.5M FDIC Insured Funds: 'We're Leveling The Playing Field For Investors'

The market has also trended higher since that time, which could positively impact MAU growth. In particular, a handful of popular retail stocks found new life toward the end of the quarter and have continued to run to start the year.

Robinhood is a popular platform among retail traders. Investors will want to pay close attention to user growth in the fourth quarter.

What Else: Interactive Brokers Group Inc IBKR reported its fourth-quarter results in mid-January and beat analyst expectations on revenue and earnings. The brokerage platform noted that customer accounts jumped 25% year-over-year to 2.09 million in the fourth quarter. 

Last week, Interactive Brokers reported monthly metrics for January, showing customer accounts were up to 2.13 million, which suggests brokerages could be off to a strong start in the first quarter. 

Charles Schwab Corp SCHW also posted earnings in January. The company reported record earnings for full-year 2022 and said it added over 4 million new brokerage accounts, bringing total accounts to nearly 34 million. 

"Momentum within the retail channel was particularly strong in 2022, achieving record core inflows during six separate months. Similarly, Advisor Services attracted over 350 transitioning advisor teams, the second highest number ever," co-chairman and CEO Walt Bettinger said.

HOOD Price Action: Despite surging to start the year, Robinhood shares are still down approximately 25% over a one-year period.

The stock was down 1.23% at $10.42 on Wednesday ahead of the close, according to Benzinga Pro.

Photo: courtesy of Robinhood.