Robinhood said it’s given a crypto wallet to every user who wants one, with millions on a waitlist. But its stock dropped Friday after Goldman Sachs said the online brokerage faces a rough road ahead.
Shares were down about 8% in late morning trades and have lost 39% of their value this year. The stock is 87% below its all-time high of $85 it reached in August shortly after its IPO, propelled by its growth in crypto trading revenue.
The company said Thursday it had rolled out the crypto wallet feature to every eligible Robinhood user on its waitlist. It also added support for Lightning payments, making the wallet more useful for low-cost retail transactions and transfers.
"Our goal is to make Robinhood the most trusted and easiest to use crypto platform,” CEO and co-founder Vlad Tenev said in the statement.
But news of Robinhood’s aggressive push for a stronger crypto market position was offset by a Goldman Sachs note downgrading its stock from neutral to sell.
“We believe this lack of clarity around the path to profitability will prevent the stock from re-rating higher,” Goldman analysts wrote.
The analysts said recent data pointed to user growth that “remained depressed” and pointed to worries of a crypto slump, which could have a negative impact on Robinhood given its growing reliance on that market.
“While the company has negotiated much better economics on crypto trading, we see the decline in broader industry crypto volumes largely offsetting this tailwind,” the analyst note said.
Robinhood kicked off the year with a disappointing earnings report highlighted by a revenue outlook that was well below what Wall Street was expecting.