By Manya Saini
(Reuters) -Robinhood Markets Inc reported a 5% rise in fourth-quarter revenue on Wednesday, as interest income surged at the online brokerage in the wake of the U.S. Federal Reserve’s rapid rate hikes through most of last year.
Analysts have said the feature, called “margin investing”, can also be used to drive greater subscriptions to its premium Robinhood Gold as members can borrow money more cheaply than the standard rate.
Shares in the brokerage rose more than 3% in extended trading after results.
Robinhood also authorized the purchase of its shares from Sam Bankman-Fried’s Emergent Fidelity Technologies, even as the ownership of the stock remains in flux amid multiple legal hurdles.
“Our Board authorized us to pursue purchasing most or all of our shares that Emergent Fidelity Technologies bought in May 2022,” said Chief Financial Officer Jason Warnick.
In January, a U.S. attorney told a judge that prosecutors were in the process of seizing shares tied to Bankman-Fried who has been charged with fraud in the collapse of the major cryptocurrency exchange FTX.
Net interest revenue soared 165% to $167 million in the quarter, benefiting from the U.S. central bank’s aggressive monetary policy tightening campaign to combat decades-high inflation.
Still, retail traders, popularly known as mom-and-pop investors, who had used Robinhood’s platform through most of 2021 to pump money into so-called meme stocks, have now started to pullback amid volatile market conditions.
Combined with worries of an economic slowdown, the brokerage’s transaction-based revenue in the quarter declined 30%.
Net loss in the quarter narrowed to 19 cents per share, compared with 49 cents per share last year.
The Menlo Park, California-based company reported revenue of $380 million in the three months ended Dec. 31, compared with $363 million a year earlier.
(Reporting by Manya Saini in Bengaluru; Editing by Krishna Chandra Eluri)
