Robinhood’s Trading Error Costed Business Too Much. It Lost $57 Million.

Feb 09, 2023

Robinhood’s Trading Error Costed Business Too Much. It Lost $57 Million.

In December, Robinhood made a processing error that resulted in a loss of $57 million. The error cost the broker around 7 cents per share in the fourth quarter. That one error, which the business claims it rapidly fixed, was the difference between Robinhood exceeding and falling short of earnings expectations. In contrast to forecasts for a 15-cent loss, Robinhood reported a 19-cent loss for the quarter.

Despite this, shares of Robinhood (HOOD) increased by 5% in after-hours trade. They decreased by 54% in 2022, but they are up 30% this year.

The board of Robinhood also confirmed plans to repurchase 55 million shares that Emergent Fidelity Technologies, a company associated with Sam Bankman-Fried, the co-founder and former CEO of the collapsed cryptocurrency exchange FTX, had initially acquired last year. The corporation stated that it was impossible to foresee when or if the share acquisition would occur because there isn't much precedence for this kind of circumstance.

Despite the miscalculation, some of Robinhood's financial metrics may be inspiring investors. To conclude the year with 23 million funded accounts, the business added 50,000 additional accounts. Additionally, it generated less than half of its income from transactions for the first time, indicating that it is less dependent on the type of quick trading by its users that powered Robinhood during the meme-stock period.

Rising interest rates helped Robinhood increase its net interest revenue to $167 million, a 30% sequential rise. The broker has had to rely on new revenue streams as trading activity on its platform has decreased. Only 11.4 million customers were actively using the service in December, a drop of approximately 800,000 from the previous quarter. On a conference call with journalists, CFO Jason Warnick stated that activity had increased in January.

The processing error quickly hurt the company's financial performance, which prompted CEO Vlad Tenev to suspend top executive bonuses for 2022. On December 16, a business called Cosmo Health (COSM), which bills itself as a "nutriceuticals" firm and has a market valuation of roughly $50 million, mismanaged a 1-for-25 reverse stock split.

Investors in Robinhood could trade shares they did not actually possess, which led to Robinhood temporarily shorting the stock. The shares increased as the corporation attempted to cover that short, causing a loss. On that day, shares started at $3.85 and reached a high of $23.84.

According to Warnick, his team processes hundreds of corporate actions each quarter, which was an anomaly they managed to get around. They are treating it very seriously.

Subscribe Our Newsletter

B2CORE 17th Release

Alex

The Best Just Got Better – B2CORE 17 Delivers the Ultimate Trading Upgrade

Stay ahead with B2CORE 17—DXTrade integration, enhanced trading tools, streamlined onboarding, and greater flexibility for businesses worldwide.

Companies
4 Blockchain Trends for 2022 Liquidity Provider - News
4 Blockchain Trends for 2022

BaaS is a cloud-based system that enables users to produce digital products in collaboration with blockchain.These digital commodities might include smart contracts, decentralized applications (Dapps), or other services that do not require the entire blockchain infrastructure to work.

Crypto
B2BROKER Liquidity B2BROKER Liquidity
Sponsored
Otar

The Future of Blockchain Transparency: What is Arkham Intelligence?
Arkham Intelligence transforms the cryptocurrency industry by offering blockchain analysis, preventing fraud, and enhancing safety and transparency.

discover
Megaphone Pattern​: How to Read & Trade with It

Hazem

Megaphone Pattern​: What Is It? How to Use It In Trading

The megaphone pattern usually happens when prices swing on both ends, especially in crypto trading and volatile markets. Here’s how you can use it.

Trading
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiriesb2broker

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Hazem

    MetaTrader vs cTrader: Which Trading Platform Shall You Choose?

    MetaTrader vs cTrader: The Full Breakdown

    Сonstantine

    Will Dogecoin Reach $1? Tokenomics and Price Analysis

    Will Dogecoin Reach 1 Dollar Analysis

    Сonstantine

    How to Get a Crypto Exchange License?

    How to Get Crypto Exchange License

    Сonstantine

    Best Crypto to Buy Now: Guide for Investors

    Best Crypto To Buy Now

    Hazem

    Grok vs ChatGPT: What’s the Best AI Assistant You Need in 2025

    Grok vs ChatGPT

    Сonstantine

    How to Choose the Right Liquidity Provider for Your Brokerage

    How to Choose the Right Liquidity Provider for Your Brokerage

    Сonstantine

    Low-Latency Trading Defined: Speed, Strategy and Technology

    Low-Latency Trading Explained

    Hazem

    How Liquidity Depth Affects Slippage in High-Volume Trading

    Liquidity depth and slippage in trading

    Hazem

    What is FIX API Liquidity Connection and How Does it Power Institutional Trading?

    FIX API in institutional trading

    Сonstantine

    OTC Trading Strategies and Technologies to Succeed in Over-the-Counter Markets

    OTC Trading Strategies

    Alexander

    What is OTC Trading? A Complete Guide for 2025

    what is OTC

    Alexander

    Synthetic Futures: A Trader’s Guide to Replicating Positions with Options

    How to Trade Synthetic Futures

    Сonstantine

    Order Book Depth: What It Is And Why It Matters?

    Order Book Depth What It is And Why It Matters

    Alexander

    Spot vs Perpetual Futures: Which Is Right for You?

    Spot vs Perpetual Futures explained

    Hazem

    5 Reasons Traders Are Switching to Perpetual Futures

    5 Reasons to Switch to Perpetual Futures

    Constantine

    Top 3 Liquidity Challenges Facing New Exchanges and How to Solve Them

    Top 3 Liquidity Challenges Facing New Exchanges Today

    Constantine

    Financial Planning in the Cryptocurrency Era — Master Crypto and Digital Asset Strategies

    Financial Planning in the Cryptocurrency Era

    Hazem

    Best Platforms to Trade Perpetual Futures in 2025

    Best platforms to trade perpetual futures in 2025

    Alex

    Top 10 Fintech Website Development Agencies for 2025

    Best Fintech Website Development Agencies for 2025

    Сonstantine

    Internal vs External Range Liquidity In ICT Trading Explained

    Internal vs External Range Liquidity In ICT Trading

    Constantine

    Portfolio Backtesting — Tools, Metrics, and Methods Explained

    Portfolio Backtesting

    Сonstantine

    ICT Trading Explained: Smart Money Concepts, Tools and Setups

    ICT Trading Explained

    Сonstantine

    CFD Trading Strategies: A Practical Guide to Risk and Execution

    CFD Trading Strategies

    Alexander

    What is a Fair Value Gap? A Guide to Trading Market Imbalances

    What is Fair Value Gap
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.