Cryptocurrency trading revenue decreased year-on-year
Robinhood, a major US investment app, announced on the 8th its financial results for the fourth quarter of 2022 (October-December). Revenue from crypto asset (virtual currency) trading was approximately ¥5.1 billion ($39 million), down 24% from approximately ¥6.7 billion ($51 million) in 3Q.
The 4Q was also a period of turmoil in the cryptocurrency market due to the FTX bankruptcy, etc., and one of the reasons behind this is that even Robinhood users were hesitant to use the cryptocurrency service.
Robinhood’s overall revenue rose slightly to about ¥50 billion ($380 million) from about ¥47.7 billion ($363 million) in the same period last year. Meanwhile, the loss narrowed to about ¥21.8 billion ($166 million) from about ¥55.5 billion ($423 million) in the same period last year.
Robinhood shares climbed 5% to about $11 in after-hours trading after the earnings release. Over the past year, it’s down about 25%, but year-to-date it’s up about 30%.
Considering Buyback of 55 Million Shares
In a crypto-related move, Robinhood’s board of directors has approved the buyback of up to 55 million shares of Robinhood stock owned by former FTX CEO Sam Bankman-Fried.
The U.S. Department of Justice has seized more than 55 million shares of Robinhood stock owned by Sam and others. It was part of the asset liquidation of FTX, which filed for bankruptcy under Chapter 11 of the US Federal Bankruptcy Code (Chapter 11), and was the subject of a legal battle between FTX creditors and Mr. Sam.
connection: The US Department of Justice seizes US Robinhood shares equivalent to 60 billion yen owned by the former CEO of FTX
The seized Robinhood shares were purchased through Sam and FTX co-founder Gary Wang’s holding company, Emergent Fidelity Technologies. It represents more than 7% of Robinhood’s outstanding shares and is valued at more than 76 billion yen ($578 million) as of the closing price on the 8th.
Chapter 11 of the U.S. Bankruptcy Code (Chapter 11)
A reconstruction-type bankruptcy legal system similar to the Civil Rehabilitation Law of Japan. The company will be restructured by reducing debts while continuing to operate. Debt collection will be suspended after the application, and the debtor will work on debt consolidation and formulate a reconstruction plan within 120 days in principle.
Robinhood said the stock purchase “represents the confidence the board and management have in our business.” He added that Robinhood’s balance sheet is strong, with over ¥790 billion ($6 billion) in cash, allowing it to continue to invest and execute on future growth opportunities.
Robinhood Chief Financial Officer Jason Wernick said:
The board has authorized the company to repurchase its stock and is in discussions with the Department of Justice about it. It’s hard to tell exactly what the timetable will be.
It is not possible to predict when stock purchases will occur, and even if they will occur, as there is little precedent. In the future, we will report the latest situation as necessary.
Web3 wallet situation
In September 2022, Robinhood launched a beta version of its self-managed Web3 wallet, Robinhood Wallet. In its earnings release, it reported that after the wallet was released, it began serving more than 1 million users who were on the waiting list during 2022.
connection: US Robinhood launches polygon-enabled Web3 wallet beta version
What is a self-managed wallet?
A wallet that is used to manage private keys and hold assets by yourself instead of an exchange. It is also called “self-hosted” or “self-custody”.